afghanistan, specifically the larger cr that now seeks to cut $51 billion from the 2010 budget. it consisted department by 16%. what impact would that have on your operations in the afghanistan? >> this er is not yet complicating our -- the cerussite a complicating our efforts. but it will. is not yetarcr complicating our efforts. but it will. at a certain point, the afghan forces fund will increase by the budget and will be capped at a much lower level. you heard it on capitol hill state my grave concerns about the edibles were state and a id -- about the levels for state

and aid. our troopers who fought so hard and tried to achieve need to some of the gains on the ground. we need to clear and hold the state aid that builds. we need experts, number one, the people. number two, we need them to have the funding to enable them to do what is necessary to build upon, to complement our efforts and to consolidate those gains in support of the development of our partners and institutions and basic sourceservices and so. >> the recent kennedy for president ask this question. why does it matter whether afghans are a set -- whether

afghanistan is a sanctuary for extra message? they can operate just as well -- for extra miss? for extra memists? they can operate just as well in your. >> we need to make it impossible anywhere. if we can force them to displays from pakistan, that is huge and significant. -- to displace from pakistan, that is hugely significant. they have established themselves over 20 years to 30 years. just when they had to leave behind massive caches of weapons and explosives, we're finding four times more explosives caches than we ever found before because we are in the areas they had to leave or be killed or

captured. you have the same dynamic if they can be displaced from pakistan. you have to go after them wherever they are. you want to do that with the minimum amount of what we have to provide on the ground and the maximum amount in helping others to use their capabilities against these organizations. and enable them as we have done with so many partners. >> a former marine in the theater has talked about the main problems, that only with u.s. direct involvement and substantial financial infusions of money -- the budget for a spans greater than the entire afghan gdp. when we leave, how will the

afghan government pay for it? from his perspective, on the ground, almost entirely by u.s. supervision and u.s. financing. >> first of all, that does not give adequate credit to our afghan partners. marja, which was liberated less than a year ago, which took 4200 u.s. marines when we started, which is down now to 1600, they have been able to hold the district community council election. this is right after their great debate. it was neat stuff. this was them running this.

there are 10 schools open now in marja. there were zero under the taliban. these are afghans teaching in the schools, not us. we may have to rebuild the schools, working to repair irrigation systems, the market's the use to sell exclusively illegal narcotics and weapons and explosives -- there are now about 15 markets that sell household goods, food, and clothing. these are the afghans. it is the afghan district governor that has done this. is there funding critical? it has been in the beginning. over time, we have to build those institutions, help them build those institutions, so they can take them on for themselves. clearly, they also have to begin that process of exploiting for the afghan people. the trillions of dollars of minerals in the ground in afghanistan, that is a fact. it is also a fact that they do not have the extractive technology, the human capital, a value chain, and transportation

train and so forth, but that can come in time. we will be supporting afghanistan as part of the international community, presumably as the australian prime minister said, beyond 2014 in some capacity. >> president karzai has issued a rare rebuke against the u.s. bowler this week. how do you respond -- against the u.s. earlier this week. how do respond? >> his comment on that, i need to see what the context is. and will leave the for the office of defense pakistan are some intelligence partners of ours. having said that, president karzai also review does over the death of nine innocent afghan civilian boys and he was

absolutely right to do it. we made tragic, terrible error. we did an inadequate handoff from adopted on the tower that had the insurgents identified to the attack helicopter flying at 8,000 feet to 10,000 feet which misidentified the boys as the target. that is why i apologize publicly, why we took a variety of direct measures as well. >> you mentioned charlie wilson's war. do you fear that the last seen will play out, that whatever happens with the direction of u.s. combat forces, whenever we depart, congress will be unwilling coming cable, or inattentive to the need -- and willing, incapable, or inattentive to the needs there? >> i have done if you hearings

over time. in this particular case, do not think i ever met with the top four in a two-day period. there were four hearings and i met with the chairman of each of the appropriations committee's and the said committee chairs for the foreign relations committee over funding. i think there is a clear recognition of the importance of the mission in afghanistan. certainly, we have to remind the american people and other domestic populations of contributing nations about the importance of that mission. but i think there is an understanding of it. >> with several questions along this line, how do see the unrest in the middle east and north africa affecting operations in afghanistan and the overall atmosphere in afghanistan? >> we have not seen anything like that in afghanistan. by and large, we have not seen the same in iraqi there. i do continue to keep tabs on it, if for no other reason that people keep sending stuff. when you invest a fair amount of

time in the land of two rivers, when i left iraq, i said that i will always have iraq and the iraqi people on my mind in my heart. i meant it. we sacrificed a great deal there. the fact is that, in iraq, the demonstrations have been about inadequate basic services. it is not about prime minister maliki, the government, or the government. it is about -- or the parliament. it is about that performance. there have been actions taken of concern in the wake of some of those. but they had a free and fair election as judged by the united nations. they have a parliament that is representative of the people. it is reasonably responsive to them. although it took a protected. time to form the government, it is -- a protected period of time to form the government, they had their say and they were able to

cast their ballot and execute their democratic right. their complaint is, again, electricity, jobs, and other basic services. in afghanistan, we have seen very few demonstrations. again, there typically about local issues or, occasionally, about some issue that does have to do with some component the politics or basic services. but no broad kind of activity whatsoever akin to what we have seen in the various middle east countries. >> before we wrap up, i have a question that has come in in several different forms of libya. before we get to that, on to get a question that is very close to your heart and your own sentiments as a leader of fighting men and women. our hospitals are full of injured men and women. had you communicate to the warrior on the ground that the juice is worth the squeeze? question good to walter reed in

because of what i am in washington. -- >> i go to walter reed in bethesda when i am in washington. you generally go there and think you have to give a lift to their morale. the fact is that they tend to lift our morale much more. we have a wounded warrior right here, by the way. he is going to harvard law school and harvard business school. it is too bad that princeton does not have either of those. that notwithstanding, is a great naval academy graduate. he is of a double amputee above the knee. [applause] he is typical of our wounded warriors. we were talking with him back there. he has taken the rearview mirror of the bus and is focused forward in counting the blessings that he does have. absolutely, he is making the most of the opportunities that he has. by the way, i do believe that

our medical facilities are doing an extraordinary work for our wounded troopers, from the point of injury to the finest technology and training. we have increased the medevac assets out there. you do get that question, clearly. i used to estimate of myself in iraq. -- i used to ask it of myself in iraq. in afghanistan, there is the whole issue of 9/11. i do not have the twin towers on my wall in my office. but this is an issue for all of us. this is not something that i do not think you can classify as

elective surgery or something like that. there was a reason for going there and there is a reason for accomplishing the mission that we're there to accomplish. this pretty well, by the way. >> we have two questions to wrap up about libya. if there is a u.s. involvement, a u.s. component in a no-fly zone, will that take assets away from afghanistan? secondarily, how will it and in libya? -- how will it end in libya? >> i would differ all that to the commander of u.s. african command and uconn and others. i would note on the first one that there certainly has been no taking of assets from afghanistan. i have heard nothing about that whatsoever. secretary gates was very clear on the enormous capability that we have in our military. by the way, we're now getting to the one-year deployed, two-

years back. that is a function of not just having drawn down our forces in iraq, although that is the biggest. we are down from 165,000 in the peak dead now to the -- in the peak and now to be high- 40,000's. there has been real progress there as well. >> general, want to thank you very much. i hope you and the audience feel that i have been at least adequate representative of you and your questions. we wanted to have a conversation, but we also wanted to bring as many of you into this dialogue as possible. we try to do it in the most efficient way as possible. you have been extremely generous with your time. how to thank the museum.

general, michael allen, thank you very much. good day to everyone. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> monday, we will take it to the annual conference of the missile defense agency. you will hear from members of congress, military, state department officials, and the u.s. ambassador to nato. that is live at 10:15 a.m. eastern on c-span 3. monday night, on c-span, marking the eighth anniversary of the department of home and security with former secretary tom ridge and michael chertoff. and current secretary janet the potano. they face the current threats facing the country and what they miss the most about the job. >> to a certain extent, i miss working with the people that i came to trust and i really respect and admire because of their hard work, particularly those early months. it was very intense, but an exciting time. they were all good people. it was a great cause. i miss not knowing.

not that everything we read, michael r. jetta, was something that you want to run home until the family and kids about. but i miss not knowing. >> today, president obama is in rio de janeiro. he is expected to give his speech on u.s. relations. secretary of state hillary clinton's remarks are half an hour. >> as the secretary has said, we have advanced together in some ways, perhaps, that would have surprised president kennedy. now is the time to redouble our commitment to share achievement and to build the brighter future we seek. i know we'll look forward to hearing the secretaries visions and thoughts on these important

issues. it is with great affection, warmer guard, and the deepest respect that i am delighted to introduce the secretary of state hillary rodham clinton. [applause] >> thank you. thank you very much. thank you, thank you, thank you. it is a delight to be back at c s i s and to have this opportunity to speak with you. i want to thank map for his introduction. -- i want to thank mac for his introduction. i can think of no one more fitting then he to have provided that opening because he is a longtime champion of u.s. engagement in latin america and did an excellent job as my

husband's on boy during the clinton administration. i think -- my husband's on vvoy during the clinton administration. this is an ideal place to discuss what i see as one of the central strategic opportunities for the united states today. obviously, there is a lot going on around the world. there is much that demands are urgent attention from the historic changes in the middle east and north africa to the tragedy unfolding in japan. as i often say, we have to deal with both the urgent and the important at the same time. with president obama departing for resilience in just a few hours, -- for brazilia and just

a few hours, this is the time to consider another important part of the world. the president's trip coincides with the anniversary of a major milestone in hemispheric relations. 50 years ago, president kennedy launched the alliance for progress, pledging that the united states would join with latin american leaders to address head-on a development challenge that was, as he put it, staggering in its dimensions. he understood that our failure to tackle poverty and inequality in latin america could tear the social fabric and undercut democracy's prospects throughout the hemisphere. president kennedy announced the alliance here in washington to an audience of latin american ambassadors at the white house. president obama will mark this anniversary in latin america.

i think that is fitting. too few americans have noticed that something remarkable has been happening in the region. there are, of course, plenty of challenges and they often hog the headlines. transnational crime, poverty, inadequate education, and so on. those are challenges that apply in many cases, including in our own country. but the real story of latin america today runs in a very different direction. it is a story of political transition and a broad commitment to democratic development, a story of pragmatic leaders who helped turn a once-troubled region into an area of dynamic, 21st-

century economies and societies, active new players on the global stage. in the coming days, president obama will visit three countries -- brazil, fell salvador -- brazil, el salvador. he and the three leaders toasting him will show in word and deed how much such a partnership can accomplish. but i want to focus on why this partnership matters to us, what this story means for the united states, for our economic interests as we rebuild our economy and renew our competitiveness for a new time, for our security and a global

strategic interest as we design a 21st century architecture of cooperation with the help of light-minded partners, for our core values as we promote democracy and human rights around the world, and for our society and our culture has a growing connection between our people as they make us more vital and innovative. during the past two years, i have had the opportunity to travel the hemisphere and meet with presidents and foreign ministers, journalists and ceo's, activist and entrepreneurs. last summer, "the washington post" had noted that i had visited 17 countries in latin america and the caribbean during my first 13 months in office. apparently that was more than any other secretary of state in that amount of time. i am proud to hold that record. what really matters is the common purpose behind these

trips and president obama's. bolstering our current partnerships in latin america and highlighting the remarkable opportunities we have to accomplish an even more together -- let's start with economic opportunities. this is the challenge on everyone's mind today and with very good reason. there are still too many americans out of work and our recovery from the financial crisis is far from complete. in this year's state of the union address, president obama late out an agenda for how we will emerge from the crisis stronger than before, how america will win the future. i share president obama's optimism. as certain as we are of the goal, it is not something that america can accomplish alone. and enhancing our competitiveness, accelerating our innovation, achieving energy security, and expanding our exports, all of these require

robust engagement with latin america. it is not only the developing economies of asia that are in the global economy today. it is also the economy is of their neighbors. brazil, with nearly 8% gdp growth last year, is predicted to become the world's fourth or fifth largest economy in the coming decades. peru has also been growing at rates we typically associate with china and india. chalet, iroquois, and argentina are close behind -- chile, uguay, and argentina are close behind. this is the start of a latin america decade. this is good news for the people

of latin america as well as for the united states. taken as a whole, the latin american economy is nearly three times the size of india or russia and not far behind china and japan. latin america has a huge a vantage that will serve it well in the coming decades, a young population. if the countries of the region succeed in delivering education for their young people, they will have a significant edge for years to come over other major economies that are starting to feel the strain of an aging population. the size of the latin american economy and its young demographic is especially important to the united states. our economy is tied much more closely to the economies of our neighbors then to those across the oceans.

43% of all of our exports stay in the western hemisphere. we export more than three times as much to latin america than we do to china. i want to repeat that because i do not think there are very many americans to understand or know that. we export more than three times as much to latin america that we do to china. we export more to latin america than to europe and more to chile or columbia then to russia. in north america is the largest free-trade area in the world. all of these facts point to a very promising trend. latin america is producing more consumers for u.s. products each year. tens of millions of people in the region are entering the middle-class. more than 30 million in brazil alone since 2003. at the same time, latin america is home to dynamic companies,

entrepreneurs, and innovators who are purchasing technology and equipment and helping drive competitiveness and innovation in american businesses. the bottom line is that geography matters. it is a comparative advantage to be embraced and we neglected at our own peril. growth in the latin american markets stands to benefit american workers more than anywhere else in the world. it is the power proximity, geographic proximity, and also the proximity of our economic interests and our challenges at home and what it will take to overcome them. both their government and our private sector need to direct our efforts to harness that power of proximity. i do understand the concerns of those who worry that globalization and integration

will take jobs away from americans. but i also know that, with the right policies, we can channel those forces to create more and better jobs for the benefit of american workers. look at the american auto industry. it is reviving itself in part by integrating more closely with our neighbors. assembling a car today involves material and put and processes that cross borders several times before a finished product rolls off the assembly line. in the end, our workers are the better for it. take the jet manufacturers and brazilian exporters. about 70% of the parts that it puts into its airplanes are made in the united states. these economic relations,

therefore, are not zero sum. but ultimately, they do benefit the people of every country involved. that why it is good news for us. monterey, mexico is becoming a base for research and development. brazil's agricultural research and investment has helped turn it into one of the world's top food suppliers. petro browse, brazil's oil company, issued one of the -- oilo bras, brazil's coming, issued one of the largest ipo's last year. and reo will host the world cup. -- and rio will host the world cup. the source of one half of our oil imports, latin america alone accounts for a third of our imported oil. with mexico, our second biggest supplier. you probably know that venezuela is also a major source.

but did you know that columbia is also as well? and brazil is poised to become one of our top suppliers thank you to its recent offshore find. as we move to a more clean energy economy, latin america's role will have to grow. already, we're working on renewable energy technology and resources with mexico, brazil, the caribbean, and across the region, thank you in part to president obama's leadership in launching the energy and climb a partnership of the americas. many other players are also recognizing latin america's potential. they are making their own in rose, -- their own interests, citing their own investment deals and free trade agreements. that should not worry is. it should spur us on. as productivity rises, companies

need your employees to meet their goals. to create more jobs, we have to expand our existing trade relationships and create new ones. that is why a broad cross- section of businesses, from high-tech companies to heavy equipment manufacturers to the montana grain growers, all support free trade agreements with colombia and panama. they know that opening these markets is essential to our own exports, jobs, and competitiveness. we are also building a 21st century smart border with mexico that supports security and competitiveness on both sides. earlier this month, we took a significant step in finally resolving the longstanding dispute over trucking under nafta. strengthening our economic relationships has benefits for all the people of the region. but it also has another dentist. it leads to the rise of even --

but it also has another advantage. it leads to the rise of the even more capable partners to achieve our objectives, from climate change to improving security in the region. that is the second area i want to talk about. the opportunity to partner with latin america on global strategic issues. president obama's visit occurs at a time when there is a growing recognition that the hemisphere stands to gain from greater cooperation he promised on shared values. governments and societies each bring their own capabilities to solving, problems. when we think about addressing the serious challenges of the drug trafficking and criminal violence, for example, countries such as chile and colombia have much to share about the process of training effective, accountable police and judges in central america. and when it comes to promoting social inclusion, brazil,

uruguay, and barbados have set an and enviable example. day today, it can be as much about how we can work together in the world as about the issues particular to our region. as countries step up on the global stage, they will make essential contributions to helping all of us meet some of those most important challenges. mexico, for example, made a crucial contribution to the fight against climate change through its remarkable leadership in cancun last year. brazil, mexico, and argentina in the g-20, chile and mexico in the oecd, chile and peru in the trans-pacific partnership, and along with mexico and aipac. these are all helping to build a foundation for balanced global

growth, a transparent global economy, and broad-based opportunity. colombia and brazil are vital partners this year on the un security council. uruguay contributes more trips per capita to un peacekeeping operations than any other country. coaster is working to become the first carbon-neutral nation -- coast of rica is working to become the first carbon-neutral nation on the earth. every country joined to assist haiti after the earthquake and continues to assist in the reconstruction. as vibrant picture as the hemisphere presence, it has not yet realize its full global potential. it is very much in our interest to help our latin american partners further embrace an active and constructive global role. let me hasten to add that this

does not mean that we will always agree. but we will agree much more often than not. even when we disagree, we will never lose sight of the powerful interests and core values that connect us. one of our most important, powerful bonds is our commitment to democracy. that brings me to the third opportunity we have in our engagement in the region. latin america has undergone such a profound democratic transformation that it can now be a model and even a mentor for those fighting to create and protect democracy everywhere. before theorget that middle east, it was latin america that people dismissed as arid ground for democracy. we could still recall it time when dictators and strong men

dominated the hemisphere. and plenty of americans thought that friendly autocrats were the best we could ever hope for. but citizens coming together, asserting their fundamental rights, in the face of autocrats and military governments overcame the doubts of the world and the challenges of transition to build democracies that deliver results, the very ideals we hope for in egypt and tunisia which have already taken place in our own hemisphere. this pack is not finished and in this hemisphere can do much more true guard against threats and challenges to democracy closer to home. in some countries, and security and a lack of opportunity remain real obstacles. in others, democracy is being rolled back rather than strengthened. and cuba remains a glaring

exception to the democratic convergence. that is something that all of us have to face up to and work towards dealing with. but the overall direction is clear. the region's commitment to democratic development is widespread and strong. that does give latin-american is a special role in helping support other nations making the difficult transition to democracy today. in recent weeks, we have seen some promising examples of just that. veterans of chile's democratic transition have already visited cairo to talk about the importance of strong institutions, advancing reconciliation, and ensuring that democracy delivers results. mexico took the lead in suspending libya from the human- rights council. and i believe that we, in the united states, can also learn some things from latin-american democracy as well. one example in particular is the

encouraging number of female presidents in the region. [laughter] [applause] i must say that i am far enough away from my own career in electoral politics that i will not take too much before suggesting that these women and societies can teach american voters a thing or two. [laughter] finally, i want to emphasize that all of these opportunities are strengthened by the interdependence of our societies, our cultures, and our peoples. the united states has one of the largest spanish-speaking populations in the world. latinos are the fastest-growing group in our country today. and we also share a rich heritage from our caribbean neighbors. more than half of our foreign- born population has roots in latin america. and these guys have shaped every aspect of our society -- and these ties have shipped every

aspect of our society and we're better for it. i know that the immigration and into independence can bring real challenges and they do make a lot of americans anxious and that is understandable. but immigration has always been a source of our vitality and innovative spirit. so if we work together to address these challenges, i have no doubt that this will continue to be an enormous advantage for the united states, one that bears directly and crucially on our economic and geopolitical prospects. we cannot afford to surrender that advantage now. going forward, all of these areas of opportunity will also be a road map for our engagement and president obama will highlight each of them during his trip. in brazil, he will announce new economic opportunities and discuss new ways we can work together on our court

challenges in energy, innovation, and education, and beyond. he will go to chile to emphasize our fundamental values and shared commitment to democracy. he will point to the importance of latin america's broad commitment to democratic development. in el salvador, he will show how we can do our part on meeting the shared challenges of security and development. that is in a country that has shown the will to move forward. ultimately, all of these partnerships boil down to this. seizing the phenomenal opportunities we now have in this region, the opportunity to create jobs and drive development, the opportunity to secure democratic progress in our hemisphere and, together, foster it beyond, the

opportunity to advance human security in all its forms, whether acting on our responsibility to address unacceptable levels of violence or an acceptable levels of inequality to produce conclusive growth for everyone. i know that looking for opportunities abroad can sometimes be a tough sell here at home, especially at a time of strained budgets and high in employment. i know well how danger, crisis, and catastrophe can take over your week, week after week after week. [laughter] but that is why this trip, which some questioned on how could the president go to latin america on this long-planned trip with everything happening from japan to the middle east and north africa, is being answered in the

right way. as the experts here at csis will tell you, strategy depends on the ability to look deeper and further than the day-to-day. and there are so many reasons why this trip at this time is so important. it is just one way to put it into context -- when i think of why we should invest in our relationships in latin america, i think about the path that colombia has traveled over the last years. i remember vividly when my daughter and husband visited in 2000, when plan columbia was just becoming. it was a country terrorized by drug traffickers and guerrillas who controlled vast parts of territory and you could strike in any major city.

foreign policy experts in this city and so many other places were calling it a failed state. tenures later, i travel to colombia as secretary of state. this time, i walked through the streets of downtown bogota. i visited a bakery run by former farc and paramilitary members -- it is not everyday that you savor the bakery of former guerrillas. [laughter] security challenges were still very real, but they were only part of the discussion. we spend more time talking about how columbia and the united states can work together to take the agenda for there to solve global and regional problems, from climate change to partnering in the security council to expanding economic growth and about what columbia

can do to help both central america and mexico in meeting their own security challenges. we talked about how we could deepen the ties between our societies and shared values and about what will be achieved when host nextwill year's summit of the americas. and we included the human rights agenda that president son does is now dancing with extraordinary commitment -- president santos is now advancing with extraordinary commitment. it is a great inspiration to all of us and becoming a great partner in the great debates of our time. the real credit goes to the colombian people and to the leaders who had to make very hard choices, not just once or

twice, but over and over and over again. but the united states played an important, some would say, an essential role. the money we invested in plan in that decade, while significant, his less than we spend in afghanistan in a single week. when president obama returns from latin america, he will have set the stage for more stories ombia's in the years ahead, with stories for trade and jobs and education, advances in human potential that we will be so proud to see and that we will benefit from. and he will have invested in key relationships and delivered a message the partnership throughout the hemisphere. it is a message we must hear at

home. these are opportunities we cannot afford to pass up or let them pass us by. the world is so dynamic right now. events are moving so quickly. people are so connected in ways that could not have been imagined a decade ago. and what i am not sure yet that many americans understand is that, if you are not in the mix, hit you are not in the arena, if you're not reaching out and building those relationships on an ongoing basis, you will find that others have stepped been to do just that. there is no part in the world that is more closely linked with who we are as americans and what kind of future we want for our children than this hemisphere,

and come in particular, latin america. so i am excited that, in the midst of another unbelievable week in the world, the president is off to a trip that will take him to three important countries and send a message to all the others and that i had this opportunity to come and discuss with you why we think it is one of the most important long-term commitments that the united states has and must continue to follow through on. thank you all very much. [applause] >> president obama continues his visit to latin america this week. he will speak in santiago, chile live at 3:30 p.m. eastern

on c-span on monday. >> today, on "road to the white harmon cain and whether he will run for the presidential nomination. >> i put my toll on the water and i am up to my neck. tens of thousands who are willing to volunteer. >> that is 6:30 p.m. and 9:30 p.m. eastern and pacific. >> special adviser to the treasury secretary on a consumer financial -- on the financial consumer protection bureau. this two-hour portion begins with her opening statements. gton bureaucracy. i look forward to your comments. >> thank you.

that concludes our opening statements. i welcome the professor back. i look forward to hearing her testimony. thank you. >> thank you. thank you for inviting me to testify. this is the first oversight hearing for the new consumer agency and i welcome it. i hope you will permit me to begin with a personal note. i did not come to washington because i yearned to be a government official. i came to washington because congress passed a year. i first job started 2.5 years ago when i was appointed to the congressional oversight panel, where i served as chair. at the oversight panel, which worked to reduce -- produce reports for you about tarp every single month.

during that time, i came to capitol hill on many occasions to testify about our oversight and to answer your questions. you schools meet early on the importance of oversight and i believe in it. since taking the job of putting together the new bureau, i have had more than 60 one-on-one conversations with members of congress. i have saw your good council on many issues. for today's hearing, i have prepared a 34 pages of details and testimony to document our startup efforts. the testimony describes our vision for the new consumer euro and the progress we have made so far. i hope it is helpful in guiding your oversight efforts. the consumer out -- is straight forward. make risks clear so that consumers can compare one product to two or three others. fine print is great for those

who want to hide something. but not good for families who want to know what they're getting into. mortgages, credit cards, checking accounts, america's families have a right to see the deals right up front. there is another issue that i know many of you are concerned about. i would like to address head-on. the department of justice has been coordinating with federal agencies and 50 state attorneys general to review and address these decisions. last month, this country's chief banking regulator came to congress and said these deficiencies have resulted in a violation in state and local foreclosure laws. they have damaged mortgage markets and the u.s. economy. as you know, this new consumer

agency is still getting started and. we will not be a party to any formal settlement with mortgage servicers. however, later this year, the bureau will receive the authority to set standards for the mortgage servicing industry. for this reason, secretary geithner arent, the justice department, and other agencies have requested the consumer agency provide. we have provided our comments and let me tell you why. it is very -- if there had been a cop on the beat with the authority to hold mortgage servicers accountable, a half- dozen years ago, if there had been a consumer agency in place, the problems in mortgage servicing what had been exposed early and fixed while they were still small. long before they became a national scandal.

the mortgage servicing problem illustrates the importance of fair, consistent enforcement. we need a cop on the beat that american families can count on. it is critical that we get this right. a real cop on the beat. right now, our government is trying to hold down a settlement to end the scandal. this is a law enforcement matter. it includes a bipartisan roster of law enforcement officials at several agencies, at the department of justice, and 50 state attorneys general. while live would be inappropriate for me or for anyone else in government to disclose the substance of the discussions regarding an ongoing enforcement matter, i do want to say that i am glad that the consumer agency has been able to provide assistance in this important matter. i think congress for creating

this agency to help provide a voice for american families. that is why we are here and that is what we are doing. thank you. >> thank you, professor warren. i will stop the questioning. we will go through the various members. in reading your statement am looking at the goals for the euro -- bureau, you have mentioned repeatedly going back is moving forward in terms of weeding out and regulatory reform with the existing regulations. can you give me a brief update on where you are with that particular issue? >> i really am glad that you ask this question. it permits us to talk about not

just our overall -- we have reached out to community banks, credit unions, financial industry, people across the spectrum to try to learn from them. where the regulations are most problematic and we have settled on our first priority for this agency. to take two forms, one is called -- these are forms -- you may remember the last time he bought a home. somewhere in the stack of documents that you dealt with, these are two forms that committee bankers tell me have roughly about and 80% overlap in terms of the content.

they are written differently. they have different pieces to them. as a result, they are expensive to fill out. they have regulatory compliance costs. there are real regulatory consequences if they did something wrong. in several meetings, i of that committee bankers come to me and show me these forms. show me what it is like and how much time they have to spend. what we have proposed to do at the consumer agency, to bring those two forms together. you would think that would not be a hard thing to do. because financial regulation has been scattered among several different agencies, at this particular one has been held by

two different agencies and there has been negotiations for more than in years to try to merge those two forms into one. now they're both coming to the new consumer bureau.. we are now able to work with the community banks and credit unions. we are going to put those together. what we are looking for it is a one-page mortgage shopping sheet that is easier, shorter. lower regulatory costs, higher value to the consumer. we regard that as the sweet spot in this agency. >> i am interested in your response. you mentioned more than a few times community banks and credit unions operate in creating this agency, those entities were led to believe that they would be exempted from the purview. in your comments, it nullifies

that impression. you are going to import ideas. i applaud that effort. having bought homes before, it is very confusing. we all know that. you are backing up what might committed to a banker -- what might community bankers said. he is already had to hire one person in a community bank to meet these challenges this is a question that goes to the heart of the overreached or exempting the is community banks that do not have the $10 billion level. they are a part of this. in terms of the service issue, we addressed that a lot and our opening statements.

the real question is, this agency does not go into effect until july. are you really a cop on the beat? kenya perform as a cop on the beat when you have not had your training yet -- can you perform as a cop on the beach when you have not had your training yet? >> thank you. i would like to ask unanimous consent to place a new record an article that was in the wall street journal yesterday. >> without objection. >> thank you so much. the dodd-frank checks and balances. it is accountable to the

american people and congress. could you identify some of those and go through some of those checks and balances? >> thank you. i want to start by making a point about accountability. i came here originally because congress passed me to be part of the effort to oversee tarp. i hope that every time i talk about accountability, we are also talking about the accountability of financial institutions. that there will be someone, a cop on the beat to make sure that they follow the law. in terms of accountability, let me remind everyone the structure of this new agency. it is the only agency in all of government was rules can be

overruled, obliterated, negated, by other agencies. the structure of dodd-frank is to make this the one agency or other agencies can come in and say, we do not like that rule. we're not going to prevent that rule. that is not true for any other agency. the second thing is to focus on banking regulators. in case of banking regulators, the throughout america's history, it has been the case that banking regulators are funded outside the political process. they have always had independent funding. the consumer agency, the one voice for american families, should have that same

independence. the reasons for making banking regulators independent is very obvious. given the way it that the process works. i will say in terms of the unlike any of the other banking regulators, the consumer banking regulator will not be able to set its own budget. its budget is capped by statute. if the consumer agency thinks that it does not have enough money to put enough cops on the in order to supervise the lending industry, the agency has to come back to congress and ask congress for more money. that means that in this respect, the consumer agency is not the

strongest agency in government. it is the most constrained and the most accountable agency in government. i should also note that in the overall structure of dodd-frank, there are about 18 federal statutes that have bits and pieces and chunks of consumer financial protection. currently, those 18 statutes are scattered among seven different federal agencies. seven different agencies about responsibility for enforcement in different bits and pieces. most critically, for no agency is a first importance. what dodd-frank provided was to

say, we're going to take existing block and we will gather it up and instead of having the conflicts, the inability to be able to negotiate and get a simple form, we will sweep of that inefficiency out. we will concentrate on exactly one agency that will be accountable on consumer issues. there are many more pieces. i apologize long. i think the issue of important. i wanted to hit the highlights. thank you. >> i would like to recognize the chairman of the full committee, mr. bachus, for questioning. >> thank you. professor warren, you have participated in the foreclosure settlement discussions with the banks. you have the knowledge that earlier.

>> congressman, let me put this clearly. we have been asked for advice by the department of justice, by the secretary of the treasury, and by other federal agencies. when asked for advice, we have given our advice. >> you do that as the -- advice from the consumer and financial protection board, where they consulting you in that role? what role were they asking when you say we were asked for advice? >> right now, we are part of treasury. we are just a division. >> the cfpb. when you say we are -- >> the standing up of the consumer agency. >> so you were asked, in your role as the --

>> as part of treasury. the first request was specifically from secretary geithner. >> he ask you for advice on what to do it? -- he asked for advice on what to do? >> he asked for advice about the ongoing problem we have with the mortgage servicers do have violated both state and federal law. >> these are criminal enforcement procedures? >> it is my understanding that what the department of justice is dealing with -- i do not know whether they are criminal proceedings involved. >> have you sat down and talked with the justice department about these enforcement actions? >> the justice department asked for our advice. >> our being the cfpb?

>> a section of treasury. >> a section of treasury. do you envision yourself as the acting director of this agency? >> no. there is no acting director. >> so you envision yourself as just the political adviser to the president? >> i have two jobs. i have a job as an assistant to the president, and then the job that is the 14th an hour a day job, and that is the special adviser -- special assistant to the secretary of the treasury for the purpose of starting the consumer financial protection program. >> have you discussed with secretary geithner or with the president and nomination -- who should be nominated to head this agency? >> in the course of my work in trying to get this agency going, i have had many conversations with secretary,

with the white house, and with others about the qualities of what might be needed -- the qualities of the person who would run his agency. >> have they told you when they may make a nomination? have you urged them to make the nomination? >> i have tried to make it clear that it is important that we have an nomination. >> and that it began almost immediately? >> i would not want to describe any conversation in detail, but i am aware of the need for urgency. >> have they given you any indication -- what if they made a recess appointment and that appointment was you? would you except that? would you say i would rather

not have a recess appointment, knowing the ball back from that? -- blowback from that? >> congressman, there is a process in place. i have tried to contribute what i can. i understand that there will be nomination soon. that is all i know. >> the setting mortgage servicing standard. you had engaged and given input and advice into does. is that correct? >> when we were asked by the secretary, by the department of justice and others, we have given advice. >> thank you very much. >> we go now to mr. gutierrez of illinois. >> thank you so much for coming before the committee this morning. i wish you godspeed in your endeavor.

i find it interesting we're worried about how is this is going to become a permanent nomination to head the agency and what is going on within the service there's any different departments. fightk we're going to that is a theme that will be carried out most of the morning and continued at -- we're going to find out that is a theme that will be carried out most of the morning and continued the next couple of years. i am really concerned about consumers and not the financial institutions because i have a funny feeling that if we carded everyone sitting behind you, banks and investment bankers and pay lenders. i do not know how many family budget makers are very well represented out there. i am not too worried. as a member of congress, i can

assure everybody that those from financial institutions are ready, willing, and able, and always have been. they have sometimes had an overwhelming voice here. i would like to ask you, when we did dodd/frank, and i want to make this clear, are you able to supervise car dealerships? >> no, we are not. we will not be able to do that. >> and that is expressly prohibited in dodd/frank? >> yes. >> i just wanted to make clear that for those of us here while we create your agency, the financial institutions, including the car dealers, got their take. they got to be taken out. as i sit around my family table, i assure you that they were here. the banks were here.

goldman sachs was here. the car dealers were here. the pay lenders were here. they were all here. let me tell you, they were extremely too successful. let us not be too sympathetic about the port corporations. -- poor corporations. i am more concerned about the people at the dining room table. it seems incredible to me. before i bought my house, the greatest financial investment i had to make was buying a car. i think that for a large portion of the american public, it will be the one instance -- for all of us, unless there's something different about you all, it is a scary proposition, buying that car. it is rife with lots of danger, especially financial exposure

if not done correctly. i am sorry that i am not too worried about them being here. we created the consumer financial protection agency last year to protect consumers from unfair, deceptive, and abusive practices. also, to create transparency and fairness for consumer financial products and services. some people would argue that we already have federal agencies that serve as regulating bodies. can you describe how it is that the consumer protection bureau is different from regulators like the federal reserve and the office of the comptroller of currency? >> yes. i think the big difference is about what people want to do. the fed is a traffic agency -- terrific agency. it does a lot of things. but the people who go to the fed go to the fed because they want to do monetary policy. that is how they are evaluated by congress.

it was chairman frank, two years ago, who made the point that in 20 years of reports from the fed, the question of consumer protection never came up. what this is really about is saying that those powers that had been with the fed will now move to a new consumer agency. there will be someone who will act as a cop on the beat, who will be out there to look at how mortgage servicers, to pick an example out of the headlines, are executing on their obligations, whether or not they are following the law. someone there to watch. and someone to make sure and be able to say to the american people, no matter how big you are, you have to follow the rules. the laws are the laws.

the office of the comptroller of the currency has done a lot of different kind of work, but principally they are on the work of prudential regulations. they have watched out for how they can protect the financial institutions. the difficulty has been that inattention to consumer issues, to consumer products like the kinds of mortgages that make it into the system over the last 10 years, turned out not only to be ruinous for american families, it was also ruinous for american banks. again, the idea that congress had was to say, let us take this functions and move them to the new consumer financial protection bureau, where we have a cop on the beat who make sure there is someone who is going to enforce the law. if we had had this agency six

years ago, eight years ago, we would not be in the mess we are today. >> if i could interject here, it is also government intervention. perhaps if we had restructured this agency, but if we also did not have the temerity to believe that congress should go in and muffle the market and get down payments down to zero, if we had not had the temerity to pass the gse act and allow government sponsored -- a government sponsored enterprise to go in the business of arbitrating and over leveraging it 100 to 1. there are a number of factors, and some of it is because of congressional intervention in the market and because congress tied the hands of the

regulators. i'm talking about the safety and soundness regulators. i witnessed all of that. i think that there is an additional consideration here. part of that is the idea that washington can better understand what the consumer demands are then the consumer. i will give you one example. it was overdraft protection. the presumption here is americans do not want overdraft protection. they do not want to pay for that. they will all have to opt in for that. what did we find? we found they all opted in. overwhelmingly. yes, people wanted that. the presumption here was that that was a waste of time. i just think the idea that

government will dictate the market on a willing buyer and seller -- it is a consideration, as is the consideration of the fact that your agency is going to be able to act outside of the normal preparations process. that is unique. that is new. the idea that it will not be held accountable for the actions it takes in terms of the budget. my main concern is an additional one. this i have shared with you. it comes from putting safety and soundness protection behind consumer protection in the regulatory structure. we tried that with the gses. everyone has a right to own a home. and congress interprets that right to meet it if you do not have any down payment, he should have a right to own a home, why are the down payments not zero?

why not mandate with a goal through hud that this has to happen? we do that, and we said at a bifurcated regulation where hud is driving the gulf, and on the other side you have the prudential regulated that was supposed to be regulating for safety and soundness. guess what. they could not step in and leverage the portfolios because the first consideration was not safety and soundness. we set this up so the first consideration was not safety and soundness. having gone through this, this is my issue. we have tried bifurcated regulation. we have had the regulators, current and past, who had this particular responsibility, both dallas this helped create the collapse of the housing market.

-- both tell us this helped create the collapse of the housing market. had we had a single regulator, it would have been better. all of us have heard this debate. i just wanted your take on that. >> thank you, congressman, i think this is a really important issue. the point about safety and soundness also goes to the point about dictating products. i want to be really clear about the vision of this agency. what we are about is making a price clear to consumers, making risks clear to consumers, making itself families have a chance to compare two or three credit cards. the figure at two things. can i afford this thing, and have i gotten the one that is best? i think congress was very cautious on your point when it set up the new consumer agency.

>> i'm going to interrupt you. i had an amendment that would make safety and soundness the first priority. it would have the credentials regulators sign off on that. the majority opposed that a minute. we were not that cautious. the mmm -- amendment was not accepted. >> you do remember the way it was set up, the other banking regulators, the safety and soundness banking regulators could overrule -- >> they had a very high threshold, as opposed to -- i have given you the example of what really happened. it could happen again. it is likely to. >> i think this is why the consumer agency was set up so that its rules of whatever promulgates, can be overruled by a combination of safety and soundness regulators, something that exists nowhere in government.

i should say because i think this is important. for families to know the price, for families to know the risk -- >> we have no disagreement on that. >> i appreciate that. i know we have had good conversations on that. >> we are going to go to mr. watt of north carolina. >> thank you mr. chairman. i yield 30 seconds to the ranking member to clarify what is going on. >> i think we should all continue to clarify that the cfpb, any action can be overruled by the financial stability oversight committee. safety and soundness is their top priority. any action that the cfpb rights into their statute can be overruled by the financial stability oversight committee. i wanted to clarify that. i yield back.

>> very high threshold. two-thirds vote. i just want to continue. >> i am happy to the gentleman. >> point of order. as one of the junior members on this, i am concerned about the allocation of time. he just made a five minute injection. >> good point. >> i think he identified himself for that five minute injection. he never yielded himself time. i assume that -- >> i ask for unanimous consent that the gentleman may have additional seconds. >> we are going to go to mr. watt. go ahead with your question. >> that does not compensate me for the time that was lost. 30 seconds does not compensate me. >> take your time. >> i appreciate that.

let me welcome ms. warren here. thank you for being here. i want to start by, and i'm getting a copy of this speech that you delivered to the financial services roundtable. i'm going to put it in the record. i was there. i thought it was one of the most thoughtful speeches i ever heard given to a group that came into the room with an adversarial nature. they walked out of the room feeling a lot more confident that none of the horror stories or horror possibilities that had been postulated and tossed around rhetorically in the

political context were about to happen as a result of the passage of dodd/frank and standing up of the consumer protection bureau. i want to compliment you. i came the that very night and complimenting you on the speech and asked you to send a aye -- i came to you that very night and complemented you on the speech and asked you to send me and a number of the financial service people in my congressional district a copy. when they have raised concerns, many of the same rhetorical concerns were raised. i want to compliment you again on your presentation, the 30 pages that you have given us that outlined how this agency is being stood up. i want to recommend to my colleagues, particularly in light of the debate that we had yesterday and the day before

about how the consumer financial protection bureau has no oversight, i want to particularly recommended them pages 18, 19, and 20 of miss warren's testimony. these outlined, in detail, the amount of oversight that this agency has been given that far exceeds any oversight than any other financial regulator has, including the point that the ranking member just made, that any rule that this agency promulgates can, first of all, be reversed by this oversight board, and then second of all,

if we are not happy with them, we can reverse them ourselves as we can do with any other financial services or any other regulation that is promulgated by a federal government agency. with that, my time is waning. i do not know how much time i have. >> you have more time. >> i do want to ask unanimous consent to put into the record the speech that was delivered to the financial services roundtable leadership dinner by elizabeth warren on wednesday, september 29, 2010. even with her personal note to me saying, with thanks from miss warren. >> without objection, it is included, including the personal note. >> i want to commend that to my

colleagues. if that does not send them at ease -- i am probably undermining your credibility with the consumer groups out there, but i am speculating that at the end of this stand- up, it may be the financial services industry that is the biggest advocate for ms. warren to be the head of the consumer financial protection bureau because of her approach to these very tough issues. streamlining regulation, getting down to simple forms -- the kinds of things that both sides of this committee have advocated and have been the primary focus of advocacy of my republican colleagues on this committee. this is not an ogre, a stand-up

person, nor is it an ogre consumer financial protection bureau. this is an important ingredient for consumers in this country. i regret i did not have a chance to ask you any questions. i am just advocating for you. >> we go now to mr. mchenry for his questions. >> thank you, mrs. warren, for being here. i understand your political point -- >> would the gentleman yield for just a second? >> and -- >> just so i can be clear that this is in the record. did i get unanimous consent? >> you got unanimous consent. >> ok. i am sorry. i ask for unanimous consent for the gentleman to have 30 additional seconds. >> you are a political appointee in the white house, and you are a political appointee in treasury. i want to go through a scenario with you, just to get context for folks on your position. walk with me here.

this is more of a mind exercise. i want your judgment on the merits of this. it is shortly after the enron scandal. let us rewind. the justice department has a special task force to go after ken lay and enron. would, in your opinion, it be inappropriate for the white house assistant to the president to call up the attorney general and get advice on how to deal with the enron matter? >> congressmen, as best i remember following the enron scandal, the justice department asked for advice from a number of specialists. >> did they ask karl rove? >> -- outside of government. i am not sure.

i do know they called my teaching institution. >> that is different. we're talking about a political appointee in the white house. i'm trying to see if you understand why the position you are currently in is controversial. do you have an understanding that you are in a unique position, the fact you are a political appointee, you have not been confirmed by the senate to have this institution that you are directing, you have no statutory authority to engage in these matters that you are engaging in -- do you understand why this is controversial? it is similar to karl rove having a similar position in the white house. if he injected himself on settlement matters like this, there would be a hew and cry. do you understand that this is a bit controversial for folks?

>> congressman -- >> yes would be a good answer. >> i work for the secretary of the treasury. in my work for the secretary of the treasury, i have begun to help put this new consumer agency together. we have tried to build already a lot of expertise on a lot of different issues, on credit cards, on mortgages, and on credit reporting. when the secretary of the treasury came to me and said, we would like your advice, i was glad -- >> don't you answer directly to the president as well? >> when the president asks for my advice -- >> yes or no. do you answer directly to the president? >> i answer when the president asks for my advice. >> ok. it is in your title. i am trying to make sure you have an understanding of the magnitude of the challenge faced on your unique position.

under what statutory authority are you acting? >> i am an employee of the treasury of the united states. >> sounds eminently reasonable. i want to get into the settlement question. media reports are saying that there is a $20 billion settlement. it is my understanding that if the u.s. government reaches monetary settlements with banks, the funds would go to the u.s. treasury. that is how -- a very standard process over the course of our nation's history. it would not be legally permissible for the hud or cfpb or any other regulator to resolve these matters by having fun is directed to any other place then back to the taxpayers. to allocate some funds, which you need to come back to congress for authorization to spend? -- would you need to come back to congress for authorization to spend them? >> congressman, we are not

involved, we are not negotiating with anyone at the consumer agency. this is a law enforcement matter. it is headed by the department of justice and their financial fraud enforcement task force. >> you are not engaged in these discussions? >> negotiating -- >> reclaiming my time. are you engaged in these discussions? >> negotiations with private parties are entirely directed by the department of justice, by the state attorneys general, by other federal agencies. >> so you are not engaged in these discussions? >> we do not negotiate with private parties. we have been asked for advice, and wherever we can be helpful, we are proud to be helpful. >> thank you. mr. hinojosa, five minutes? >> thank you, madam chairman. professor elizabeth warren, thank you for your valuable

advice to the u.s. treasury and to our president. i have had lots of meetings with representatives of financial services. i want to say that texas this is the overt act fees. banks also are concerned they might this another key source of revenue. having seen how consumers are

struggling with the increase in the cost of groceries, gasoline, many having lost their jobs and homes, i cannot help but want to troot for your work and say that consumers need protection. they do not have the lobbyists and we have been congress working to protect the representatives of all the financial-services. tell us what we can do in congress to ensure that this law is implemented and that it will help our consumers get jobs and hopefully put our country back

into what we experienced during the 1990's. >> thank you. that is a heartfelt question. i wrestle with the issues you describe everyday. america's families have been on the r opes for a long time. many families have turned to debt only to find what they thought would be temporary was far more dangerous and costly than they had anticipated. this agency is here for american families. it is also here for america's banks. i met with community bankers in san antonio, texas when holly petraeus and i went down to the

air force base. we listen to their concerns. it really has become clear that what we can do as a consumer agency to cut regulatory burdens is to make risks and prices clear. it will be good for credit unions. it'll be good for the financial institutions. they are willing to put up a pradesh pretending it is at one

price. these competitors take families away from the founder banking systems. they need a stronger economy. that is what we are here to do. >> thank you for that response. i heard my friend talked about all we have in the bill. it seems like they are the voice for medium-sized and large banks. explain to me why they are so concerned? >> many thought the business

models are a way the round -- the world is. we need to figure out how to turn the revenues. king it impossible to compare one project with others. some of them are very concerned. >> thank you very much. >> thank you. >> thank you. i appreciate the opportunity. we appreciate your time coming here.

i want to explore that a little bit and find that your views on these organizations and with a bit and whether you believe they should fit. i have a background in real estate and developing. the first time i ever vested was a two-family on 17th street in michigan which is a very rough neighborhood. the families that living there and the families that looking at trying to make an opportunity for themselves really were not going to be able to fit into those conventional boxes. we were talking about big and medium-sized banks.

many have been able to service people. whether it is people holding land contracts, i know many people who been involved in real estate. they hold millions of dollars of personal funds and land contracts. you hit on a phrase just in this last answer of serving americans families. there are a number people wanting to do that. they are afraid of some of the directions that this appears to be going. they not -- they may not be able to function. what are some of your views that are less than conventional. whether they may be disabled are may be low and moderate income,

there is a marketplace that needs to be served. >> thank you. this is a very important and thoughtful question. the first we thought was for $23,000. we were not conventional buyers. i understand the importance of being able to serve american families across a wide variety of circumstances. i think it has been one of the important things that community banks and credit unions and also non-bank lenders when they come to visit have talked about with me, how it is that they build a business model around adjusting to the different needs of different customers that they

acknowledge. they acknowledge the importance of relationships banking. they know how to customize projects. i think the best way i can say this is that we are working with those to serve families. we are committed that prices should always be clear. they should never be a family ready to take down a mortgage. there should never be a family considering taking out a mortgage that does that get what the basic risk is. there is never be the case that a family get information in a way that they cannot make some straightforward comparison of one market to two were three other. that is the direction we have been driving it since the first day i have been there.

we have tried to do it at the end of the agency and to the entire attitude. old simile, that is what you want to be able to predict ultimately, that is what you want to be able to do -- old simile, that is what you want to be able to do. it serves the american people. that is our job. i appreciate that. if anybody has refinanced their home are few have been buying it, there is plenty of paperwork that you are assigning. i am concerned about the redundancy and whether some of these things are necessary.

how will this work for the lenders. how will this work for the broker. but colet and implement here. they have about 1 million in land contracts. he says he will not be able to function. i like to hear how that would be taking care of. >> >> i want to commend you for your work to do it in plain english.

i heard from consumers that they are very frustrated because it is unreadable. i've also heard from community banks. it is easy to forget that most people were trying to make it. they are trying to do right by people. they felt like they had to simply regurgitate the language of the wretched state -- a regulation or statute. they felt that was the safest thing. it is a service to consumers and to those who are trying to make an honest living. i do remember with respect to the first proposal that financial institutions offer a

plain vanilla project. that dropped quickly. they offered an amendment that they can not require any financial institution to offer any project. when there were complaints that the sovereignty may be threatened by consumer protection, it cannot be required to do something that would be impossible for them. they have to do things that they will to stay in business. >> that is correct. the argument about consumer choice reminds me about the argument a century ago. it would depend upon the right. it turned out consumers and not want to buy beef.

they wanted the assurance that there were buying pure beef. if they wanted. they could buy it here and let it rot. they did that give you the right to buy spoiled be. i have yet to talk to anyone who actually chose some of the products offered in the last decade. i cannot think of any size. as some of the can identify someone that qualify for a prime loan that wanted a key 28 with a monthly payment of 30% or 50%. i asked if he could identify someone that shows that knowingly. i mentioned over jobs. i want that. i do not want the pranks to be

able to process overdrafts not in the order in which they come in. or that the atm machine ptomaine that funds available to you know people that wanted that? i do not. i made that offer on the house floor. if anyone knows someone who really wanted those products, let me talk to them. let me understand how they would have chosen it.

one of the criticisms is that it does not say what the banks supposedly did. usually when there is an enforcement option, but that they cannot do it into a settlement. it is bad for us. did you know that they ask that there be some detail. >> i have no knowledge. that is what i understand. >> thank you.

>> thank you. good morning. i think all of us here want to steer clear prices in regard to lending. i want to make sure borrowers know the rest -- the risk of the loan they are taking. there are other issues flaring up. i do not want to beat a dead horse. i want to go back over what your role is here. there are two jobs contemplated. one is that there will be a director.

it is perfectly clear in the dodd-frank bill that someone has to give the agency up and running. gency up and running. but that is why i am asking the question. it walks like a duck and >> like a duck, it is a doubt. -- and quacks like a duck, it is a duck. he might say that you work for the treasury secretary, but anyone who looks at what is happening agrees as though you are behaving as though you are the acting secretary. we want to see confirmation from the senate. this agency provides a voice for the american people. i look at this. we are the voice of the american people. when we do not have any

oversight, i see that as incredibly problematic. that's all right. thank you. it is between the time the president signed this bill into law and the time the agency received the authority under the statute. this is hiring in signing contracts. it is you. it is the secretary are there. they ask me to come in and spend my time doing this. it has been a 14 hour a day job. >> i agree. i know exactly what you are

talking about. had he been confirmed? >> i am acting on the secretary of treasury. let's let me move on. it appears that you are not the acting director. they all have five member board. they are consolidating this. the primary right -- be there.

there is the believe that having a single director and have someone doing banking may still more efficient operations. there are involved in important areas. but they work well. >> they are not banking examples. >> would you be opposed to a five member board? >> what i will say is that this was there. >> are you opposed? ? congress made the decision appeared >> i'm not asking about congress. are you opposed? but i think it was the right decision. >> this leads me to my next point.

i think d.c. concern with my colleagues. they agree with what you are doing. it deals with safety and soundness. it is a 10 member board. we did a super majority. all we need is one more. our time is up. >> thank you. thank you. >> and want to start off by saying thank you for your great work. i have been on the oversight committee. i have seen you in action. i think you do a wonderful job. despite all the criticism, i hope you understand that those

to really understand what happened, you are the champion for consumers. i hope that you are nominated. he has shown a lot of coverage to stand up against the folks you stand up against. there are lots of people the stand up for the big banks. they said that for financial institutions. they are heavily financed. to there are lots of lobbyists. you are in the teeth of that. i ask you to keep at it. i think you are fighting the good fight.

you are on the side of the angels. hopefully, you will be nominated. we hope for that. understand this change. there is this great investment and the status quo. we see this. people are nervous. i do think -- bank of them and allowing them to be overruled. it does permit a short circuit in place where if it was unwise, it might happen. there is a failsafe there. that is certainly warranted.

the damage done to american families cannot be overstated. it is done to the market. investors -- they feel that the arrangement is rigged. there is insider training.

they do not believe the system is honest. they think it has been compromised greatly. they are hoping he might be part of that. the complexity of the market is growing. and asking you to try to explain to consumers that are out there about your role as someone it confirms my help rebalance the power there before consumers and financial institutions. >> i appreciate that.

the banks will be heard from in washington. the question is whether ordinary families will be heard from. they want to provide good projects. this is about this agency. it is a real belief in a market so long as they are honest. i do not care how big you are. everybody follows the law. the laws are directed to you folks a you can have a real chance in this financial marketplace.

the risks ought to be clear. it ought to be that you compare one product to two or three others. >> thank you. black thank you. i like to ask a bay have this. i sought out a second mortgage. it is a five-year prepayment penalty. i probably paid for% or 5% more than the going rate to be able to get a second mortgage on my home.

i was able to repay debt and the film my dream. they know that they can do it. the government is going to tell them that it is a bad deal and they cannot do it and not allow businesses to make those loans. i appreciated your visit. there are a lot of young

businesses that are just getting started. they use a lot of their own personal credit to finance these things. more than 47% of small-business owners use personal credit cards as opposed to business credit cards. that is in nature. i want to sit between an individual using credit cards to buy fancy clothing and a small business owner obtaining credit. >> thank you for a year hospitality. i want to be clear about what we are trying to do.

but we compare one product to another. they said the small businesses. they keep it from there and birds. i know how they struggle. >> how are you going to distinguish that individual here is unique it for business from selling here is using it for personal use. >> they are excluded. there are clear. there is a question about whether you buy good-looking clothes or ugly clothes.

but what is this going to be mean that almost 50% of business start-ups and business people that use that. they are putting us again. if your agency regulates their activity, what does it mean to the sector that is growing. >> i heard two weeks ago from a group representing small businesses. small businesses are very concerned. when they finance this, risks are not made clear. this agency is about making a clear.

they need to know how much they are spending. it to be segregated. >> impersonal credit, it is about making this clear. >> they have 10 billion in .ssets par what part of my business practices with your business are regulate. >> it is not regulate the ordinary banking activity. this isn't area like home mortgages.

we talked about how it is figuring it out. they make it come earlier. we are focused on the consumer credit card that and whether or not those to using them are actually following the law. >> thank you. >> i would like to ask unanimous consent to insert the comments. >>. -- thank you for allowing me to have unanimous consent to be a part of this.

elect to thank her for her service to the country. i believe that you are doing a very difficult job. i trust that you will continue to serve your country as well as you have. i like unanimous consent in report from the americans for financial reform. it is a proper support dated january on page 4 of the report, there is an indication that there is a need for a permanent director. they see him as a transitional person.

but there are no objections, may been submitted to the record. >> without objection. she has submitted this to us. believes community bankers and credit gainers and made it clear regulatory crisis. they go on to indicate that this is hiring lawyers to investigate the complex rules. importances small banks and credit union cannot be overstated. they are disproportional -- disproportionately providers a small credit to business can the

community bankers are excluding early importance. they have made it clear that there is this that they proceed. they are regulated out of business. is it possible within the bounds of the ethics for us to work together to help the small banks continue to provide a good service for consumers? also, how are you may delete

embracing this crisis that they perceive as one that may cease to function. >> thank you. i see this very much the same way. i worried about our community banks. i worry about our providers. we are clear about the projects. they are willing to make this clear.

they are doing what they can on the consumer side. there are better. >> >> let me state this. in your report on page 18, you indicate that in addition to the fundamental strength congress has imposed, you indicate that specifically you are required to submit the agency annual reports. we indicate that they conducted each year.

he had to submit financial .perating plans when i the mention that over said was there. i mention these things because i wanted to relay some of the concerns. it has more oversight them less federal agencies. cracked a couple of observations, we see this straight up. >> you are demanding this from

the people you enforce. >> he testified. i like to believe in it. online to think about the sec and mr. madoff and believe that in two years ago be operating exactly the same. it might fall short of maybe you are going to be the government agency that the idea that you

propose on page 4, we believe we have a market place in american families. when i go to a bank and ask for a low, the first thing i go to has made it clear. it is concise. we are trying to enforce consumers who do not like the answers they can from institutions that have the paper work. you aren't going to enforce the standard on institutions and more only answering the demands of people to come and get project because it cannot get the project somewhere else -- i remember in the state legislature. they wanted to regulate payday lenders. they charge $20 for learning

keep 100 per month. i felt like that is too exorbitant. it was 1000%. one guy came up and said what damn business is it of yours if i buy $100 a day and want to pay back $120. that still rings clear. at some point, you should ask that to your agencies. the question at i have -- it is my understanding that we will not be here if the basic rules of the road were consistently enforced, protecting in -- protecting consumers. i get that you believe that there was no enforcement for mortgages.

they did not do their jobs. nobody has this. >> i think the evidence is very clear. they did not do their jobs. >> maybe the government asked the banks to give loans to people who cannot afford it. they did. the government insisted that banks give loans to people who could not afford it. no loans with payments for a from made. the loans without the ability to be paid was lumped into bonds. the exotic instruments were created out of that.

that is what was not regulated. he is giving a project that is not in compliance. >> i think we can agree that the crisis in home mortgages and then the rest of this economy was not caused by community bankers or credit unions. it was caused one mortgage at a time for mortgage brokers. they put out products. it was deceptive. i think that is the evidence of what went wrong. >> the race those. >> -- the release of those.

>> thank you. >> >> thank you. in your testimony, you indicate that many rules making noncompetitive. diplomatic competitive disadvantage. >> they have this on the better pirro. it is fairly complicated. they depend on this from more than 15 years. it comes to one agency.

we will combine its. they originally these marriages. it is the most efficient way to do that. and might actually produce this. >> are you going to look at the cost benefit? >> we certainly but that the costs. >> liking the the numbers all day long. >> been they have work to the

community banks. >> answers the question. i'm sorry to interrupt. i want specific answers to specific questions. at what point is it too costly to implement? we are required by law to do a cost-benefit analysis. >> i know you are.

a costa million dollars and a billion dollars. at what point will you say no. >> that is what it is. >> i think your question about the point is important. we are communicating right now with the community banks about the changes they want to see. they think there are cost savings from them that benefit consumers. they are going to put a new form in place. now have to put the front and the back.

you are going to be the new examiners on the block. >> ones with more than $10 billion in assets. in the consumer agency will be the primary supervisor. >> dave will be based. -- the transfer date is july 21 of this year. that is one the other seven agencies stand down in some of their responsibility for enforcement and bills of writing.

>> what else have they been doing? >> we will be doing something different. we will be enforcing it. >> by evelyn to the collecting them. >> -- are you going to be collecting them? >> thank you. i want to thank you for taking the time to do this. i would like to continue down the lane in terms of how you think this will impact small- business this. consumer enters into the transaction were full disclosures. are there any reasons on which you are the agency could possibly invalidate the

transaction? if so, what are the possible reasons? >> i tried to make it clear. it is about making the crisis clear. the point is to get an informed consumer. i believe that american families are good at making decisions when they have the information up front. >> i cannot agree with the more. the way it is written, there'll be one person in charge. >> it may choose to enter and a

financial transaction. they have unformed practices. there are certain practices that are getting an unfair. there is that will come to the consumer agency.

>> can you give me any sort of an idea in how you plan to reduce the regulatory burden that adding another regulator into the mix. people, it is the uncertainty that the their creating another level of uncertainty. especially the power being put into the bureau. i take is that they will wait. >> are you concerned that this expresses it? we will take transfers of the authorities that are currently there in seven other agencies.

we will put them in one agency. we will hold accountable. " we have tried to do is reach out to all potential stake holders. we have talked to nonbank lenders. we have gone out and have had extensive conversations with the investment community. they have had questions about how this would be set up. if you are going to make these a little more obvious for consumers to understand, let's

add some of the risk. >> it is greater than in several people making a mistake. kenny turner. tell me right now? it is a temper some board have a way to overrule it? >> that would be with a 2/3 majority.

>> i would like to add two minutes. >> thank you. thank you for yielding my only question deals with the idea that we are protecting consumers and doing the things that eat away at their ability to pay their mortgages. we are here to protect the consumer. we are here to make it easy for consumers. >> there have been basic rules on the road. i was wondering if you are going to be the champion of the consumer as it comes to inflation.

they realize with the most big practices right now is what is taking trillions of dollars away from the bank accounts. is your protection going to log into the really heavy duty pie? d.c. roldan? >> i am sorry. -- do you see it roldan? >> i am sorry. our policy is not in there. >> i thought we were going to protect anyone. i appreciate it. i yield back. >> thank you. thank you for being here today. just a couple of quick notes. we heard about anyone who landed money that is considered morally reprehensible has been called out. i would like to think that it that was the case, there was no marriage is on the part of the

democratic majority or president that allowed it to happen. secondly, we have heard from our colleagues about how spoiled before us once opposed by people who wanted to eat it. that is a fair point. no wanted to eat it. where there is a legitimate concern for governmental action to prevent a social harm, we wind up going from the inspection to prevent spoiled be. it is to the elimination at half the bills at the levels. in your eyes, with the fact that we to not in nearly appropriate to your entity, what do you believe are the appropriate limits for the agency that it will never do and what is the proper role in congressional oversight.

as you know, of the banking regulators are part of the appropriations process. congress has repeatedly made the very wide decision that pulling a banking regulator, somebody who has to stand up to the richest and most powerful and say, sometimes, no, is not a good idea. and congress has never done that. as it stands right now, the other banking regulators stay outside the process. the consumer agency is the only one of the banking regulators who actually does not have full control over its own budget. its budget is effectively set by the fed, unlike the federal

reserve's the ability to set its own budget and the other agencies. so the consumer agency is more constrained on the financial side and it is subject to being overruled by esoc, unlike any agency anywhere in government. i am convinced that this consumer agency will be a voice on behalf of american consumers. but congress, quite reasonably, in setting this agency up made it the most constrained of the favorite -- of the federal agencies. >> i appreciate that, but not necessarily bias. it happens to be in the constitution and that the entity within the government that is most responsible the

people is the house of representatives and may be the richest and most powerful people. thank you. cfpbid someone call the siep about a complaint about a mutual ?und - >> i believe the boundaries on our jurisdiction are pretty clear and that the consumer agency does not do -- >> they don't get involved with investors. >> i think investment issues are left to the sec. >> in your letter to congress and randy, dated january 31 of this year, york -- your

concluding paragraph says, "does sincerely appreciate your thoughts and council regarding the task ahead of us. i hope we can work together on behalf of the millions of americans, large banks, community banks, credit unions, and investors who are counting on us to build a strong and effective consumer bureau to make the markets work for everyone." you used the word "investors." >> i did, congressman. i have been reaching out to investors -- >> but you said that investment would be left to the sec. >> know, you ask me that if there were a consumer complaint, would it be directed to the consumer protection bureau. >> the answer is in no. >> the answer is no. the investors i have spoken to

are those who invest in financial stocks. i have been meeting with them because i actually believe they are stakeholders. >> invest in financial stocks, but there would also be covered by the sec. >> if you will permit me to explain -- investors in financial stocks want to understand about what faces -- >> i understand. the issue of jurisdiction, who has stressed action over this? you or the sec? >> it is clear that the sec has jurisdiction if a consumer has a complaint. >> so you will stay out of that whole area. is that what you're telling us? >> no, congressman. congress has made that boundary. those who invested in bank stocks, the same way that those who invest in their plan stocks -- >> but that is not your jurisdiction. is that correct? >> my jurisdiction is consumer

financial products. among the people who are interested -- >> i understand that. i thought you had entered the question clearly and now you're backtracking. >> i am not backtracking el. >> does the bureau -- i am not backtracking at all. >> does the bureau provide protection to those who buy stock? >> its is the jurisdiction of sec to deal with consumer complaints about stocks. there is no reason for the consumer agency to be involved, yes, sir. >> so you will stay away from that area. >> we will not go beyond our jurisdiction. >> ok. >> the other question i have is, in going through your testimony, it says on page 6,

fine print in passengers full of legalese make it impossible for the customer to know what is really going on. this is wrong. they should not struggle to understand the basic agreement. would you not agree that the legalese that the banks and credit usance -- and credit unions are using is because of legal requirements? >> sometimes, congressman, the fine print is there because of regulations. >> most of it is. when i practice law in real estate transactions, we had one page. i could close in 20 minutes. now regulation z. in hud 1, multiple pages, it takes two

hours or more. the consumer cannot read all of this stuff. how will you go against all of these agencies? >> congressman, when the transfer date comes and we pick up from the other seven federal agencies -- >> the gentleman's time is expired. we have more questions that we want to get through. mr. ackerman. >> i am buoyed by the notion that anyone who can take the kind of badgering and defend yourself and the agency will be doing an incredible job to defend the consumers of this country. against those who exercise the kind of greed that has been exhibited. >> just a quick question. at the beginning of a last

decade, subprime lending and predatory lending, i asked you if you knew anyone who qualify for a prime mortgage and got a subprime mortgage. i outlined some of the predatory terms. you answered a that you did not the gentleman from georgia offered himself as an example. it was hard to tell what his circumstances were at the time. one term may have made it predatory. i am sure he thinks he is a smart businessman, but they probably snickered and gave themselves high fives when he walked out of the room. but he also said that he could not otherwise get a loan. even after you have now heard the example of the gentleman from georgia, do you know someone who qualified for a prime loan, but consciously picked a subprime loan with the

kind of terms that became prevalent in the middle of the last decade? >> know, congressman, i cannot. >> thank you. -- no, congressman, i do not. >> thank you. >> there is not a lot of beating around the bush in listening to your explanations. one of the things that troubles me -- i do not know how i wound up in your buddies sucker list, but i get a lot of junk mail. there is a whole group of financial institutions in various sectors that send you mail, which are solicitations for programs and offers, and they do not identify themselves on the envelope. there's no return address and sometimes the return address thais a post office box

somewhere. but you can see through the usual window that they have in the such promotions. besides your name and address, if concerns your account at a financial substitution which you have an account at. you're anxious to open it because this is coming from my bank, credit union or what have you and you open it up and it talks about selling you an insurance product or life insurance because you have just refinanced your mortgage or opened a mortgage or an account, which becomes a matter public record. and you think, because of the presentation on the olive, that this is from your financial institution. you can read three pages worth of information and sales pitch before you realize it is from someone you do not know or have a relationship with. i do not want to interfere with

anybody's right to free speech or advertise or promote or inhibit their business in any way, but is meant to be deliberately deceptive to the potential consumer and making them think that this is from their bank. would to be amenable to exploring a method of requiring some form of identification and could i have somebody in your staff meet with me and my staff so that, at least, you know on the all-pro this is from rather than being -- you know on the envelope who this is from rather than being deceived? >> congressman, we would be very pleased to send someone over from the consumer financial protection agency to work with you and see how we can help.

>> understanding is under constitutional rights of the producer to do that. >> congressman, we want to be as helpful as we can. i want to offer one small caveat. we're just getting started. you may have to be a little tolerant with us on timing. >> we are today i am just getting started myself. >> think -- i am just getting started myself. >> thank you. >> i want to start with a brief statement. in your statement, you compare the bureau to other banking regulators. but i believe that is done in a proper comparison. you stated specifically that congress has consistently provided for independent funding for bank supervisors to assure that banks are examined regularly and fairly for both safety and soundness and compliance with the law.

but your agency does not have a safety and soundness aspect or mission to it, does it? yours is consumer protection. so the reason why it other banking regulators have independent funding is because of this safety and soundness function. that is authority. you do not want members of congress with the political aspect getting involved with anything that has to do with the safety and soundness in financial institutions. you have a consumer protection function. the others have a funding mechanism that goes through the appropriation process, unlike your spirit yours is a consumer perfection agency, just like the other ones and should go through the appropriation process. if you worthy -- if you're like the other banking regulators, would do not have a board as a checks and balance as opposed to one lead authority, which is where you are?

all the other ones have boards in their framework. yours does not. i do not think your comparison to bank regulators is the appropriate line. therefore, the appropriation process should be as we said before, having checks and balances for what comes out of the agency. let me go to questions. i appreciate the fact -- you have been commended on your yes and no answers. talking about the little settlement and servicing issue out there right now in the news, is there a difference -- to you believe there is a fundamental issue between penalties for criminal wrongdoing vs mere paperwork violations? is there a difference on how those should be treated? >> congressman, there is an ongoing legal enforcement action -- >> right, that is what i am

asking. >> it would not be appropriate for any member of the government, me or anyone else, to comment on what is involved in those negotiations. >> let me ask you this. have you pushed for or advocated a recommended dollar amount with regard to the other regulators involved in this situation? >> congressman, i know that, given the level of problems that have been uncovered with mortgage servicing, the acting director of the comptroller of the currency has been hindered in congress to talk about violations of state law and local law -- >> what about you? you are here today. just tell us what your doing. are you giving suggestions to the other regulators? >> as the government is trying to negotiate with those servicers that the occ has

found have violated the law, they have asked that nobody speak about the content. >> can you tell us what your role is in this? >> i can certainly tell you what our role is. >> can you tell us if you have made recommendations? is that part of your role, to make recommendations to them about dollar amounts? >> of the secretary of the treasury has asked us, the consumer agency, to give advice. the department of justice -- >> so you have given advice -- so the answer is yes. >> on behalf of the american people, they have asked -- >> will the gentleman yield. >> i only have 30 seconds he

left. >> the department of justice has made clear that they do not want people who are part of the government -- >> i understand that. what legal authority does a political point have with regards to this? >> congressman, i think we need cops on the beat to enforce the law. >> great, but we need to know what the law is. can you inside with the authority is to enforce the law? >> we need to enforce the law. >> can you tell us what the losses? -- what the law is a? can you cite what the legal authority is for you to do these actions? >> the gentleman's time has expired. >> i just wanted to thank you for your remarkable public service and four serving so well

in two jobs, as a special assistant to the president of the united states and a special assistant to the secretary of the treasury. i truly do hope that he appoints you to be the first permanent director of this body. you have worked extremely -- you are a chain been, really, for consumers and you have been balanced and fair. i compliment you on your work hand on your testimony today and on the fine job you are doing. thank you. >> thank you. i would like to thank you also, prof. warren. i would say that the duplication in the financial education across the board of the gao study, there is a great concern of the gaps -- if this agency does not have a leader in july and regulations that are moving toward and what will happen there -- they're a lot of players at the table who are concerned about that.

i appreciate you coming in and testifying and i would say that the chair notes that some members may have additional questions for this panel, which they may wish to submit in writing. the record may remain open for 30 days for members to submit written questions for this witness and to place their responses in the record. this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> right now we are waiting for a briefing from the pentagon. the vice admiral, director of the joint staff, will give an operational update of what is going on in with the appeared admiral mike mullen said he is not sure how long the military action in libya will last. so far, he said, operations have been successful. a top military officers says the goal of the mission to protect the citizens could be achieved without regime change. meanwhile here in the u.s., a republican representative, the chairman of the house armed

services committee said that president obama needs to explain to congress what the goals are for "operation odyssey dawn," enforcing the no- fly zone. president obama is on a visit in latin america. he stopped and rio de janeiro to deliver a speech on u.s.-brazil relations. tomorrow, he heads into santiago, chile for a press conference with chile's president. he is scheduled to make a speech at approximately 3:30 p.m. eastern time. he then travels to el salvador on tuesday, where he will meet with the president for a bilateral meeting and press conference before returning on wednesday. president obama will stay in el salvador, where he will tour the national coulathedral. while we wait for a briefing from the pentagon, let's take a listen to some of your calls and

questions on "washington journal." from domestic newspapes beginning with "new york post." "take that gaddafi." "strike one." an air assault, no ground troops, but tomahawk missiles continue to strike those targets. some other headlines beginning with the chicago tribune. u.s. allies are attacking libya. most of it right along the coast. you can see along the mediterranean sea. l.a. times -- attacks on libya. you can see from the u.s. and navy destroyers. operation "odyssey dawn" was the name of the operation. from the "richmond times- dispatch", the u.s. striking libyan forces. and from the "miami herald",

libya under fire. you can join the conversation online at twitter.com/cspanwj. caller: good morning. i would like to know what the heck is going on. here we are and another freakin' war. congress is on vacation. who is minding the store? i'm appalled. i think it will have to have a u.s.-nationwide recall and get the buildings of of the building behind you. host: the president speaking to reporters and brazil saying it is a humanitarian effort to help the people of libya. next is a viewer from chicago. good morning. go ahead.

caller: i think this war --hey are taking, the rioting. they should not allow him to kill all the innocent people. it's time to let everyone out there know. host: from page of "the new york times", a number of stories related to the situation. a no-fly zone is imposed. american and european forces beginning a broad campaign of strikes against the government of colonel gaddafi yesterday. in a scale not seen since the iraq debbie war. and a mission to keep gaddafi from using air power against the weaker glol rces was betrayed by pentagon and nato

officials as under french and british leadership. but the pentagon said that american forces were conducting a campaign to knock out libya's air defense systems, firing more than 100 tomahawk missiles. caller: long time since i talked to you. i think this is the camle'el's nose under the door and mr. obama's fine dish which to get us into africa. -- fondest wish to get us into africa. no good news for taxpayers. host: u.s. and allies a striking at libya, that is the headline. richard is a joining us from massachusetts. good morning. i think this is totally ridiculous. when they talk about gaddafi

killing his own people and how we are such nice people ourselves, yet we let babies be butchered and their mothers womb and we call ourselves good, nice people we are a bunch of hypocrites. whatever they do to us, we deserved. host: from twitter, how do we win in libya? we're supposed to believe that we protect other protesters? you can join the conversation at twitter.com/cspanwj. 202-737-0002 is our line for democrats, and 202-737-0001 for republicans. if you are an independent, the number to call this 202-628- 0205. in new orleans, u. allies striking libya. "wcannot stand idly b," comments from the president yesterday. he travels to the capital of

brazil today. good morning. caller: hosthello. good morning. yes, i think it is a shame that we are spending the taxpayers' money over there in the middle east. the main concern is that they are attacking the middle class here in the united states. host: mike joins us from ohio. we're getting your reaction. caller: i would like to know what congress is doing to stop our executive branch and the litary. here is another undeclared war. i am sick and tired of o government -- every time i turn around they are bating the rest of the world. host: gaddafi defiant after the

attacks appeared and a sepate letter address is of a two david cameron net and to the un secretary, the letter saying that the un move is invalid because of the resolution whh does not allow intervention int the internal affairs of other countries. john is joining us from newport news, virginia. good morning. e'll go to claude who is joining us from california. welcome to the conversation on the republican line. caller: here we go again. i hope it works out that we do not -- so it's noworever. we need to develop oil and our country so that we could say goodbye to middle eastern oil. host: you can also send us an e- mail. good morning. where are you calling from?

>> we go live now to the pentagon. >> good afternoon, everyone, and thanks for being here today. i want to take a few minutes to update you on our military operations in libya and then i will be happy to take your questions. as you know, we began our enforcement of the u.n. security council resolution yesterday with cruise missile strikes on selected air defense systems and facilities ashore as well as air defense and command in the structure. coalition forces launched missiles from the mediterranean. the number rose to 124 after a brief. we judge the strike had been

very effective in degrading the regime's air defense capability, conclude their ability to launch many of their sa-5's, 3's, and 2's. this shows a rush depiction of where these strikes we're executed. the strikes after i briefed you are in red. there has been no new activity by the regime, and we have detected no radar emissions from any of the sites targeted and there's been a significant decrease in the use of all libyan air radar with most of them limited only to the areas around tripoli. we are not ruling out further air strikes against valid targets if and when the need arises. in the past 24 hours, we have conducted air strikes on military facilities and aircraft not far from mr.

roddick -- from miserata. these drug day joint direct attack munition. the photograph to my left shows an overview of the airfield and this is a dual use their field meaning that it is also used for civilian and commercial traffic. you can see the area -- let me point to doughty. -- out to you. in green in the center, that is where the commercial area is. the military areas are these triangles. we targeted only those areas and facilities outside of the boxes of the civilian uses for military aircraft. here is a depiction of one of

the targets, the triangular parts, and you can see the damage from the aircraft shelters. one of which we have blown up here. next slide. and in addition to the b-2 strikes, we hit the ground forces of the colonel gaddafi. shown here is a coalition against the gaddafi coalition forces south of benghazi. we had aircraft from france and great britain. there were backed up by the u.s. navy providing electronic worker support. fuld better reports are still coming in, but we judge these to have been quite successful in halting the regime ground movement in this region. the highlighted box are still

shots from the carriers weapon system video. benghazi is not safe from attack, but it is under less threat than yesterday. we believe his forces are suffering from isolation and a good deal of confusion. next slide, please. you can see you're basically down of how we see thattoday with the regime forces less free to maneuver than they were before operations commenced. we now have the capability to patrol airspace over libya and we are doing just that shifting to a more consistent and persistent air presence. as admiral mullen reported, the no-fly zone is in place. let me conclude by saying that this is an internatidesigned t . mandate. since i spoke last, the coalition has been joined by spain, belgium, denmark, and others. the u.s. is militarily in the lead, but we're working to move

this to a coalition command structure. we do not know when we will be ready to do that, and we do not yet know what the structure will look like, but we're working very hard to define it. we remain committed to creating and sustaining the conditions under which we can take lead in implementing a no-fly zone. with that, i would be happy to take your questions. >> yesterday, you were hesitant to talk about whether or not colonel gaddafi was indeed a target. is he, himself, now a target? >> we are focusing on the conditions that we need to enforce the no-fly zone which is the command-and-control structure of the integrated air and missile defense system and the headquarters elements associated with it. the regime targets that may be moving on to the libyan people.

>> it is so you are not going after gaddafi? >> we are not going after gaddafi. >> you mentioned specifically that there was an infantry element that was targeted by the air strikes. why is that part of the mission if the mission overall is to put conditions in place for a no-fly zone and enforce it? why are you going after infantry elements? >> they were mechanized positions and they were advancing on benghazi. to protect the libyan people, we put them under attack. >> so gaddafi's ground forces are a legitimate target of this coalition in this ongoing -- >> if they are moving in advancing to the opposition forces in libya, yes. we will take them under attack. >> what is the difference between protecting the libyan people and applying support for

the rebel forces? it seems like that is what you were doing. >> i would not say air support for the opposition forces. we knew that these advanced elements were moving into benghazi with armored equipment in order to do that. we took them under attack. [inaudible] >> what do the libyan ground forces have to do to stop the attacks in? >> if they no longer advanced on benghazi, that would be a good sign. >> if they stopped advancing that would stop the attacks? >> i'm not ready to answer that particular question. >> are the troops advancing anywhere? >> i do not have the intel at

this time. i question anything that gaddafi calls for. he wanted a cease-fire then brought in history chapter calling for a cease-fire. >> any other countries will be joining in the coalition? >> they have asked that they make the announcement. >> and do you have an assessment of the number of ground forces starks >> -- forces./ >> the b.h.a. has not been released. i would say in the dozens. we have no indications of any civilian casualties. >> a recording these attacks with rebel forces in any way? >> not at this time. >> the arab league has expressed

reservations about the operation. would that be a factor? >> it just shortly before i came in here, the arab league and forced the no-fly zone. >> any other questions -- any of this country's been dissipating in the operations? >> we are in the process of enabling them, basing them, transporting them into the theater. >> what other countries are we talking about? >> the one country we have announced is catarrh. we are assisting in the movement of those forces -- the one country we have announced is qatar. [inaudible] >> we will not discuss spacing, but they came out of europe.

all of the aircrew has returned safely to their home bases. >> there is still danger to the air crew? they could still be hit. people are still firing up into the air. they may not be missiles, but there are people firing at them, right? can you explain what is firing at them? >> the fixed surface to air missile, the sa-2, sa-3, and sa- 5, the radar which would tell them where to point their weapons has been taken down and we do not see them to rebuild. there are no mobile surface-to- air missiles, sa-6 and sa-8, and there are manual ones, sa-7, and there are quite a few of those out there. we have airplanes that resigned

to electronically attack or take under attack this particular targets, a package of those, in order to do that. then we use self-defense measures, speed, and maneuver. [inaudible] i have not received and that they have officially asked for us to announce it or if they are still under consideration. >> there are explosions heard from anti-aircraft missiles in tripoli. what should we assume those are? >> the surface to air guns, we have not directly targeted those fixed or mobile sites, so they could be either one of those. >> you are saying that gaddafi's

forces have to stop advancing and that would stop the attacks on gaddafi's forces. does the reverse hold true? if they stop and the rebel forces move into their area, are you saying there are not allowed to engage under any circumstances and they have to lay down arms? or they simply have to stop movement? >> of this point, i am not willing to specify the messaging we have put out there. >> do you think the libyan air force is capable to fly helicopters? >> yes. even in the no-fly zone to have set up over the years, we never fully prevented airplanes from flying. what some point, it is a vast amount of air space. if he chose to, he might be able to get something out of. i would not rule out that nothing will fly by any stretch. anything that does fly that we detect, we will engage.

>> you said you have not determined fixed or mobile radar sets -- sites yet why? >> we have not attached the mobile surface-to-air radar sites. the a.a.a sites, whether fixed or mobile, there are so many of them that it is better to avoid them than to try and attack each one of them individually. >> are there any concern to move those to populated areas? have you seen any evidence of that? >> we have not seen any -- any evidence, but we will not rule that out. >> when did the 124 cruise missiles and? have any more been shot off today? >> we talk to you that 1530 yesterday, eastern standard time, and it was probably about

2100-2200 eastern standard time last night when meek shot a few more. >> any more shot and killed today? >> that, i am not aware of. >> which nations right now are actively patrolling the hillsides? >> united states, united kingdom, france. as the nation's you have seen fly their airplanes in, they arrived, they get there, they set up their infrastructure, their bases, then we work them into the next day's flying cycle. every day, you will see more nations are participating. >> any sense of how many planes in the air right now? >> i will not talk about specific tactics at this time. we are in the process of relocating them there. >> admiral mullen said it would

decreed a 24/7 watch over benghazi. >> we would to be able to enforce the no-fly zone in accordance with the u.n. security resolution 24 hours per day. >> can you expand upon that? >> the no-fly zone will encompass from tripoli to benghazi and south. i could not hazard to guess the number of miles. it is such a vast area. you can focus on about the top one-third of the country which would be about a good rule of thumb. >> how far west? how much territory west of benghazi the you feel it is safe enough to start flying patrols? >> we are enforcing targets into

tripoli all the way to south of benghazi, that is where we are enforcing the no-fly zone. >> how many days do you think the u.s. will be involved in air strikes? >> that will be difficult to tell this time. we are on the leading edge of a coalition effort that we will eventually transition to the rest of the coalition and we will be providing a unique capability. at this time, it is too difficult to predict when that is and it is a function of as countries flow in and get sufficient capacity, but they will then take over the brunt of the mission. >> days? weeks? >> i will not drive this to a time line at this time. >> when using a transition to the rest of the coalition, what does that mean? one country? several countries? >> our intent is to be a part of the coalition but transferred the command to a coalition command.

then we will start to use more of the capabilities that the coalition nations do not provide that we have, so shifting of the main effort. that would be tankers, electronic support aircraft, o i.s.r., and things of that nature. we will probably continue some of the fighter mission as well, but not the preponderant. >> you mentioned the specialized aircraft. >> many nations will be putting them in. you'll be seeing things of that nature. whether there are specialty electronic claims centers, airborne command and control, , etc.s, logistics' flight

we have not specify the types of airplanes we're looking at. >> any search and rescue efforts? >> we have search and rescue of look at this particular time. >> can you estimate the cost has been so far and how it is being split among the coalition? >> i am not able to estimate at this time. our focus of this particular point is to get set up and enforce the no-fly zone. that is what we are doing. we will look at the cost at another time. >> how many aircraft in total will it take to enforce a no-fly zone? >> we will take as many coalition partners of want to come in to do this with us. >> had any coalition partners committed to putting troops on the ground? >> we are setting up the conditions to enforce the no-fly

zone and does not include ground. [inaudible] >> we have many nations that are waiting to announce themselves. we have the united kingdom, france, canada, italy, belgium, and qatar. >> what kind of broadcast messages are being sent to you? >> we are putting up all of our specialized aircraft of that nature and i am not able to talk about the messages. [inaudible] >> a do you have overflying allowances for neighboring countries? our neighboring countries allowing you to base movements? if so, which won the or how many?

>> we have overflight agreements with many nations and we will not discuss what nations are doing that. we will let them make that announcement. >> there are breaking reports of a plume of smoke over benghazi. can you guarantee they will not attack. ? >> i can guarantee he is not on a targeting list. if the happens to be in a place and expecting a surface-to-air missile site and we do not have any idea if he is there or not, then yes. but no, we are not targeting his residence. we are just enforcing united nations security care of the resolution. that is what we are doing right now. >> just a few more and then we are finished.

>> we will not mention any nation that we are using basing or overflights. we let those countries make those announcements. >> ok. thanks, guys. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> that was vice admiral gortney briefing on the military action u.s. is taking against libyan forces. we had back to capitol hill and the senate banking committee hearing on the troubled asset relief program, or tarp. we will hear remarks from the treasury department's special inspector general in the south dakota at democratic senator. this is about one hour and 15 minutes. mr. barofsky? >> it is a privilege to appear

in front of you once again. it is also a pleasure for me to be testifying alongside my oversight colleague. tarp has been an historic program in many respects one has been the unprecedented oversight assigned to this program by congress as embodied by the three representatives present here today. by working together closely and coordinating our activities, i believe that we have well served the american people. by making sure that we could cover the broadest coverage possible and insuring unprecedented transparency and accountability in the 13 programs that make up tarp. part of our focus has been on policing and investigating tarp related criminal activity. we have had a major impact.

52 different individuals and 18 different entities have been the subject of civil or criminal action. 18 defendants have already been convicted of tarp related fraud, including just yesterday a senior official from colonial bank. colonial had a received conditional approval for tarp funds. investigators stopped a massive ongoing accounting fraud dead in its tracks. all told, investigations have led to the recovery of funds and avoid a loss of fraud of more than $700 million. making sure that tarp will pay for itself. another example of the collected benefits. the tangible results in one of the pieces of good news from tarp below expectations of the financial costs of the program.

my oversight colleague deserves credit for those lowering numbers, as does treasury for its efficient management. our approach to live and in losses has been focusing on lamenting the amount of losses from fraud. working the treasury to develop strong anti-fraud provisions within the program. the neighborhood of $50 billion. i am very proud to say today that we will come there -- no more close to that number. in no small part, thanks to the willingness of treasury and the federal reserve to work with sigtarp. i recall a conversation i had

with secretary nightmare. after a somewhat heated discussion on another topic, he told me that he believed that sigtarp had scared away people from participating in the tarp program. strong and better program design has been instrumental. on a final note, today is likely my last time testifying before the u.s. senate as special inspector general. one of the initial times i was here before this committee, it was my confirmation hearing. ranking member shall be you gave me some advice. he told me this was a great opportunity and if i did my job well, i would never be able to work again. he thought it was a good thing. my wife disagrees.

i am very happy to say that in this limited circumstance, senator, circumstances have proven you are wrong. i have been able to get a job. i'll be joining in new york university's school law as an adjunct professor and senior fellow. i think you -- i thank you all of the members of the committee for your strong unwavering continuous bipartisan support. we would not have been able to be close to achieve the successes we have had on behalf of the american taxpayer without support. i thank you. i thank you for the opportunity to testify. >> thank you, mr. barofsky. we will miss you. >> thank you, the chairman johnson.

i am pleased to be here to do that. under a tarp, a broad range of activities have been initiated. providing assistance to the automobile at agency and aig and offering incentives to residential mortgages. as tarp passes its 30-month mark, markets appear to be less volatile than they were into a dozen 8 -- 2008. while many programs have ended, some institutions have been paid, the prospect of repayment of other institutions remain somewhat uncertain. some top programs have been terminated. others have closed and are winding down operations. several programs have focused on preserving homeownership and provide assistance to auto

companies and aig remain active. the capital purchase program, a lot of that has been repaid. a $30.8 billion remain outstanding. one of the issues that we try to focus the treasury's attention on is that there are a number of institutions that are still in the capital purchase program to allow potential issues. almost 200 of them have mr. least 1 dividend payment. there are issues with some other give it -- other institutions that may not be as sound as they were thought to be. this means that they require continued monitoring. the program had a slow start, so

far, it has not been some money. that is not necessarily a sign of success. there are issues going forward grade -- a report today that will look at the programs that go beyond the modification program. the foreclosure alternative program and the principal reduction program. there have been some movement and the right direction, but we still have some areas were treasury can improve those programs. the auto industry financing program has a balance of $44 billion. $29 billion has been repaid. the auto industry are doing much better than they were back in 2008. whether they will be able to

repay the treasury investment, that is still up in the air. it will depend a lot on what share prices do. the ipo, the fact that they sold below their breakeven price means that the remaining shares will have to bring the a higher price to actually make the program break-even. the treasury has gone from 60% owner to a 33% owner. that is a good thing. it needs to make a lot of money in future sales to be able to make the program of break-even. aig has continued to receive assistance over the last year from an equity capital line. it has are paid $6.9 billion. this has reduced the treasury's balance to about $58.7 billion trade treasury bonds money to% of aig. -- the elegant. the treasury cones 92% of aig.

a lot of uncertainty to that. let me point out that one of the recommendations we made in our most recent report issued in january is to try to focus treasury's attention on staffing going forward. it has been in very good shape in charge -- as far as stopping. are concerned that if the programs wind down, it may be harder and harder to retain staff. we think there is the need for them to update their workforce plan and take into account all the active -- alternative scenarios for retaining staff. i appreciate the opportunity to testify. i'm happy to answer any questions that you have. >> thank you. thank you for your testimony. as we begin questioning, we will

have declared -- the clerk puts five minutes on the clock for each member's questions preyed he recently testified -- questions. if we should not repeal the program, how do we fix it? is one option to have treasury focus on the earlier part of the process? >> it is a fundamentally broken program. if it is going to be permitted to continue, the treasury needs to -- let out a plan on how to fix the program. there are a number of good ideas out there. you start with something that secretary geithner has a acknowledged.

the very structure of the program is broken. this whole program is a voluntary program. it is designed by encouraging servicers to participate by making incentive payments. it is a carrot program were discipline would be provided, financial penalties. with secretary guide their acknowledging that the incentives are insufficient, not power enough to overcome the conflicts of interest and treasury's refusal to impose a single sanction, it is it really all that surprising that the program has been a failure? the place to start is let's address what secretary geithner acknowledged was a problem. the incentive structure, the lack of penalty on servicers who

amce has been abysmal under the program paraded as a starting point. for those seeking to defend the existence of the program, one of the most basic pieces of information that you need to have is what is treasuries projection of how many people is going to help? i have been calling for this for more than a year. gao has been calling for this for more than a year. congressional oversight panel went so far as to give its own analysis and its own estimate. cbo has provided an estimate. they will not. those who are criticizing the program had every right to conclude is that the reason they will not provide a number, is that their projections may be so terrifying that they will not

provide this level of transparency great to have an informed debate, treasury needs to be transparent about its expectations. not a total of offers the engine to make. how many people are going to be in sustained permanent modification. their failure to do so is inexplicable. and indefensible. >> do you agree that servicers should it reach out to homeowners sooner? should treasury explore creating a single point of contact so that borrowers know the to communicate with? >> we have raised recommendations and some of them have been implemented or partially implemented.

there has been some improvement in that arena, but there is still work to be done. what we have been pushing for from the very beginning is performance standards. the particular performance standards for the services. we think the treasury needs to come up with the service standards and hold the servicers accountable and until they do that, we think some of the problems are going to continue to fester. >> what is your response to these suggestions? >> thank you, mr. chairman. on the issue of performance standards, that is precisely what we have done. let's remember that this is a crisis that was a decade in the making. for two years, nothing was done. when we launched this program, no modifications were occurring. we launched the program on a voluntary basis. in terms of performance standards, we have forced the servicers to do a lot of things

they were not doing. that includes a whole range of our were protection. -- borrower protection. we stop that. we put in other borrower protection as well. there is a need for national service in standards. this is a servicing model that was set up to collect payments on performing loans. it was not equipped to deal with this crisis. far more is needed to fix that. the regulators are now paying attention to it, the conservative of the gst is paying attention to it, i think we will see it. secondly, it is very difficult to make estimates as to how many we will ultimately serve. the cost of this program is directly related to how many we serve. it is not a matter that we will spend the same amount of money

regardless. we publish reams of information about this program, including how many people were reaching every month. permanent modifications, trial modifications, how many auletta that, how many read default. everybody can see how this program is doing great -- is doing it. this is a very difficult housing market to fix. this program is the least helping fix it. it is not enough, but it needs to be continued. >> senator shelby? >> i want to thank you for a great job that you have done as inspector general. i remember when you were up for confirmation and i told you that i hope that you would do something very good for the

american people and that he would stand up for the american people, and you have. i am glad that you are -- my reference was that you did not need to be employed by some of the people you're going after. they would never hire you anyway, thank god. you will leave that post with a lot of thanks from the american people for the job you have done and you will always do well. i know that. i would like to ask you a couple questions. in written testimony, you states, unfortunately, tarps most significant legacy may be the exacerbation of the problems posed by too big to fail. you go on to " secretary brightener -- you go onto " secretary dieter and which he states that in the future, the federal government may have to do exceptional things.

if we face a large -- in your view, do financial markets still believe that the federal government will not allow big banks to fail? >> thank you for your comments. i really do appreciate them. they mean a lot to me and my family. absolutely, the financial markets believe more than ever that the united states government will step in and save the too big to fail institutions should there be another financial shock. >> isn't that what helped bring about the gse's where they are today? >> it is merely the identical toxic cocktail of guarantees and market distortions that too big to fail banks have today. yes.

>> i just want to read them into the record. this is on page 6 in your testimony. regardless of whether all the required regulations are properly calibrated and fully implemented, the ultimate success depends on a certain degree on market perception. the act is clearly not -- reflecting on secretary geithner's candid assessment of the likely limits in the events of another full-blown financial crisis. but largest institutions continued to enjoy access to cheaper credit based on the existence of this government guarantee against failure. they recently reinforced this a

vivid and bandage for those institutions. in january of this year, s&p announced its intention to make permanent the prospect of government support as a factor in determining a bank's credit rating, a radical change from pre-tarp practice. this pattern of the banking to repeat itself in some fashion regardless of the government's recent emergency policy response. moody's stated that it believes that the proposed resolution regime will not work as planned, opposing a contagion risk that most likely will force the government to support -- to supply support. i want to quote a former secretary of the treasury, lawrence summers. a healthy financial system

cannot be built on expectation of bailouts. do you disagree with that? >> no, i do not. >> thank you for that. in october 2010, in an editorial, secretary geithner stated that tarp is over. the tarp specter -- although no new tarp funds may be obligated, a $59.7 billion remained obligated and available to be spent. do you have differences with those figures? >> thank you, senator. with the secretary was referring to was the purchase of 40, the

authority to make new commitments under tarp, expired. we do still have about $150 billion in investments outstanding. we do still have commitments with respect to warehousing programs. -- to our housing programs. i would also like to respond to the too big to fail issue if he would let me. would that be all right? >> absolutely. >> i share your concern about the issue. we have to have the financial system where companies fail. >> the two big to fail doctrine is a flawed doctrine from the beginning, is it not? >> it is an unfortunate doctrine, that is for sure. create the problem. we needed tarp because we did not have the tools to fix it.

i think that dodd-frank has given us tools to fix it. >> to current members and one former member of the congressional oversight panel explained by tarp was not a win for taxpayers. they criticize the it ministrations claim that tarp was successful because the money may be reclaimed. the focus on repayment of tarp is deceptive because it fails to consider the huge taxpayer cost from non start programs that directly and indirectly enable many of the large banks to repay their tarp funds. they led several programs that provide significant aid to banks, including the federal reserve's purchase of $1 trillion guaranteed, treasuries, $150 billion, and other fdic programs.

do you disagree with that conclusion? >> i think is important to view tarp in the context of the broader scope of the government's response to the financial crisis. it's a lie, we published a comprehensive overview of all those prep -- in july, we published a comprehensive overview of all of those programs. our job here is to focus on the tarp, but it does not exist in isolation. indian count -- any accounting would have to include those other things. we always did try to put it in context. >> thank you. >> thank you very much, mr. chairman. i was listening closely to the recollections of those and -- of you and the ranking member. i was also there. what i recall was palpable fear

that we run on the cusp of a significant financial collapse, that the tools available had been exhausted and that we needed assistance. in the context of allegis laid -- legislative debate, with cropped something -- we crafted something equity injections which has proven to at least stabilized the situation. it has avoided a significant financial deterioration, which would still be putting us. -- plaguing us. you have done a remarkable work.

you of in a thoughtful, but your independence and your integrity and commitment has been so clear. it has been inspiring. but aside too big to fail and all those discussions, if we had not acted decisively, where will we be today? but you have a sense of the magnitude of what we were facing? >> i can best reports on the extensive work we have done that in interviewing all of the major participants. we were on the brink of a cataclysmic failure. this was a very significant crisis that we had not seen since the great depression. there was a sense of widespread panic among regulators. the reaction was, just not -- the federal reserve's programs,

the trillions of dollars door from of the situation. that that really reflects the deep level of panic that was built by the regulators and the market participants. >> having done all this work, that reaction was not a rational given what they were seeing in the marketplace? brenda, -- frankly, the very tentative response in the 1920's and 1930's to an international crisis prompted him and others to say, this is the only way we can do it. they were very clear about this fallout. >> there is no doubt that financial crisis are psychological. that fear was universal and widely held.

one of the things that the correctional oversight panel really hits the nail right on the head is that to while we do believe that tarp was a very important component of common market, it is impossible to say, which one of the marietta programs was responsible for help, and the market eventually? we believe that the broad statement by secretary paulson and later by secretary geithner air, that they would not let these large financial institutions fail. they have the tarp funds to back it up. it costs a lot of the problems that you were discussing about moral hazard, it was instrumental in common the market and avoiding the that cataclysmic potential second great depression. >> i also want to thank senator

kaufman. it was one page, an outline. we did some things that gave them the flexibility to respond, but also went after -- we insisted that there be warrant provisions. i knew that if the wall street investment bank was going to do this, they would take preferred stock with a very preferential rate of return, they would also insist on warrants. those warrants, the right to buy their stock at a fixed price, as they improved, we got a second pay back, which is about $8.6

billion. it might be seen as a pure transfer from the improving banks. can you comment on that? >> thank you, senator. thank you for your push for that provision. it was very important and you are absolutely right on your figures. we have recovered about $9 billion from the warrants because we had a recent repurchase this week. that is from about 15 or 20 auctions as well as 45 repurchases. we stuck more positions that we will sell over time. >> a quick comment -- this issue of moral hazard is not unique to this time and this place in financial history.

anytime a government provides support, we do it through the deposit insurance fund. it has proven to be very effective. one of the reasons it has been effective is that it has been very well regulated. if we accurately and aggressively and with the resources regulate that, we will do a lot to avoid a potential crisis. >> it is really quite extraordinary. there is a consensus. there was a solid consensus that

tarp stopped what could've been a very bad situation. moral hazard was one decision -- the moral hazard part and you see it now in terms of the rating agencies, if you're running an organization and you know that this is positive on this is-any of the cut that- section off, there is no price to be paid. the higher the risk, the higher the return. you just go for the moon. if you fail, the taxpayers are there to get you out. this is not some theoretical economic business school analysis. the real concern is the rating agencies are saying they believed that there are firms

that are too big to fail. a very big firms that are too big to fail. >> the chairman has been very gracious, thank you. >> thank you very much. this is directed to mr. barofsky. i am not certain. i am troubled by the long time assertion that the success of tarp was determined by the return of taxpayer dollars. as if that is the criteria in which we can judge the success or failure. i am troubled by that because i think it fails to take into account other consequences, even if all the money is repaid to the treasury, there were consequences of tarp not accounted for. i think of things in your testimony about large

institutions continuing to enjoy it access to cheaper credit. there is a consequence to that. my small community bank in kansas has a consequence to that occurrence. when you couple that with dodd- frank and increasing regulation. larger institutions have cheaper access to credit and a better ability to spread the cost of additional regulation among the larger economy to scale. my smaller banks are disadvantaged. congress responded by providing money to large institutions. there is a consequence in places like kansas for community banks. if the criteria -- we still to take accounts other consequences of this legislation. it fails to take into account, was there a better way to do it

than we did? could there be a greater return? i have heard several talk about -- the savings and loan bail out. that was the criterion which we are judging success today. this is better, we will lose less money than we did them. i wonder about -- was that not a better example where we were able to reap return and prohibit investors from getting a return as well? one of the things that is a consequence of tarp is that those invested in these constitute -- institutions, they were held a lot less accountable for their investments than continental? my question is a broad one. i am not satisfied when i hear

that just because the money has been repaid, this was a good idea. >> nor should he be. the tunnel vision of mission accomplished ignores the important non-financial costs of tarp. they are just as important and may prove to be more important. of the moral hazard, the legacy of too big to fail that tarp has left. it is done real harm to governments -- it includes the failure of tarp to meet its very important main street goals as well as wall street deals -- wall street bulls. -- gaols. -- goals. this is not a simple black and white answer.

it is a much deeper issue. >> when you originally talked about it, you talked about $356 billion. 80% of the news articles talk about tarp and talk about the $700 billion. i totally agree with what he said. there -- the thing that is amazing is that 60% of americans think we lost it all. 60% think we've lost all $700 billion. spending a little bit of time saying, okay, we have a problem here. and this is part of a big thing. all the questions are legitimate concerns. we did not lose $70 billion. 25 to $50 billion is a lot of

money. the yacht -- that is an important point to make. >> thank you. is there any analysis by those of you have done oversights in regard to was there a better way to do it? was there a greater opportunity for return? >> we have 30 reports that you can take a look at. we have a final reports and you can look at how to do it. we do not write the rules. we start with the basic premise that congress has passed a law and we have oversight. if you go back and read the reports, a rich area to say, without the panic, without the concern, could we have done this a little differently?

there is a lot of meat in the study reports. >> only a former senator would attribute the responsibility back to congress. [laughter] >> thank you, mr. chairman. i want to welcome all of you here today. thank you for your testimony. senator kaufman, it is certainly a pleasure to see you again. you added some much to the work that has taken place. thank you for your oversights. i am thrilled to hear that you will be back at duke university doing your good work. it is great to see you again. one of the things that you talked about in your testimony is the reference to the higher funds for our smaller community banks.

the smaller community banks in north carolina consistently are very concerned about their capital requirements, the regulation, their inability to do so much of the lending they have done in the past. it has so adversely affected so many of the smaller communities where these banks have been the mainstay. one of my concerns is what can we be doing in congress to reverse this trend? i am talking primarily about the higher costs of funds that you mentioned. to ensure that we maintain a by its network of community banks in our main street communities. >> mixture we do not have too big to fail. it is difficult -- make sure we do not have too big to fail. the key thing is that we have to get away from this too big to

fail. it is bad in some many different ways. there is a lot of things and dodd-frank. look at our small banks right now. it is interesting to find out how many small banks are now in commercial real estate. why are small banks in commercial real estate? the big banks, and i can do all the other services that they use to do. they can do it at a much lower price because of the advantages that they have. are really do think -- they hang together. you have these major banks that

feel like they can -- they are too big to fail. i think it is up to congress and up to the treasury and not to the other regulators to make sure that the dodd-frank provisions are in there. make sure that we do not have too big to fail. how will they survive when they have these giant coming to town with low interest rates? it is very difficult. unless you go into things like commercial real estate. and now you see what happens. it makes them -- it makes it tough for them to make money. >> thank you, senator. we agree very strongly that we have to have a thriving community bank industry in this country with the obama administration took office, we did not provide any additional funds to the largest banks in the country. we provided funds to about 400 very small banks.

i agree with decisions they made. they were necessary to prevent a collapse of our system. but we have tried to work with the smaller banks. i also point out that while we have had some weakness in that sector, those banks are getting stronger and those banks that took the tarp money overall in a much better place than the industry average. the task now is to implement the tools under dodd-frank. you have to distinguish between what you have to do in a crisis and what you do to look at what were the causes of the fire? how do we prevent this from happening again? >> it appears that some of the smaller banks are having trouble paying some of the tarp money back. are we setting them up by continuing to ask them to pay a higher rate?

>> that is a very good question. they are not obligated to pay it. they have to have the approval of the regulators in order to pay it. as a result, many of the regulators have said, you should not pay this. you need to conserve your capital. that is fine with us. we do have a number of banks to have not been paying their dividend, but we look at the rate at which banks better in the program are paying dividends on preferred stock versus those outside the program, to the extent there is data, what we found was 11% of the banks in the program were not able to pay the dividend. >> i wanted to return to -- i know several of you have talked about how this has not been operating the way you would of liked it too.

mr. barofsky, could you speak about the changes going forward to helping homeowners? >> the important thing is there has to be initially and acknowledgement from treasury that this program is failing. the cessation of continuing to defend the status quo -- >> going forward, what can we be doing? >> i would say, you start with the reassessing the incentive structure and the penalty structure. if the current system is not working, revisit that structure. we have made other recommendations as well. recommendations regarding principal reduction, which appears to not be working. increasing transparency. there are a number of things.

ao, there is a whole list of recommendations. >> senator kaufman, do you have any comments? >> the program is over. the reality of the situation is bad -- is across the table from each other and then modify a lung. that is pretty simple. now they have the servicers in there. there are two really big elephants and the room. -- in the room. the servicers are these third parties. they are the big banks. you have a conflict of interest, if you are a first

servicer on a bank and you have a second lien on a mortgage, and the first mortgages was someone else, do you want to modify the first mortgage? when he modified that first mortgage, your second lien goes to zero. those aren't too gigantic conflicts. treasury -- those are too gigantic complex. the whole thing was designed for our subprime problems. it became quickly a prime problem. it is trying to catch up with all the different things. we've had four reports on it. we have identified with the changes are. it has to be a program that recognizes the realities of what happened. >> thank you, senator. i think we have implemented most

of the specific suggestions that have been made by the oversight bodies with respect to the program. as far as the basic structure, that is determined by a lot and the powers that we had. it had to be voluntary program. i do not think it is a matter of acknowledging that is failing. i did not consider the fact we've got 600,000 people and to permit modification or the fact that we have helped another 1.4 million at least get some breathing room to a temporary modification, many of them went on to get other forms of modification outside of our program. or the fact that this program has resulted in significant changes in the industry is a failure. we have gotten about another 40,000 families. that is not enough and we need to do more. one of the things we have done in response to the congressional

oversight panel's suggestion was that we did implement programs that addressed unemployment and falling house prices, we set up a hardest-hit program. we're sending money to a number of states hardest-hit, including north carolina. those programs take time to ramp up. the important thing is to keep at it. this is a crisis that ticket long time to develop, so it is not going to be fixed overnight. >> mr. barofsky, can you elaborate about the program and which you advise us to do what it -- with the penalties? >> the numbers are potentially misleading. there may have been 40,000

initial permit modifications, but is that a next number? how many of those have dropped out? 1.4 million people -- it demeans the real harm that many of those people who got failed trial modifications have suffered. it has been documented time and time again. >> can you come up with some examples of penalties? >> one place where we can start is by treasury living up to its commitment that it made in late 2009 about imposing financial penalties by withholding payments to mortgage services under the terms of their agreement. this is what they said. recently, treasury has been saying, we do not have that ability. we did not give ourselves the

ability to post financial penalties for failure in conduct. we sent a letter and we asked them to detail to us what the changes in their legal position. so far, they have ignored that. going back to the agreement and trying to withhold payment and impose -- that would be the easiest thing to do with work within the contract if it is as they suggest ambiguous, try it. let's go to court. let's have servicers sued treasury under the idea that they are allowed to willfully and violates the terms of their agreement with the consequences. i think that is a good starting point. in congress, as far as financial penalties, is encouraging -- if he believes that he does not have the necessary tools under these agreements, he should tell you what tools he needs in order to compel servicers to abide by

the terms of their agreement. tell them what tools they need. >> i am happy to respond. >> there is always more that can be done. this is an industry that was not working. >> we have not changed our legal position. we cannot impose fines and penalties in the manner of a letter later wed -- in the manner of a regulator would. we have over 200 people working on compliance. they would have preferred to write a check. we made services go back and

solicit people. we made them go back and do door knocking. we made them go back and read about -- and reevaluate people. i think you will see us withhold more payment. we were working on getting the systems in a place for they could implement this program. i've been reading the testimony. i'm happy to have anyone if you answered. i am thrilled to see my former colleague here. now i get to ask you all of this. just kidding.

we did not do talk. i am happy to answer. we face the risk of the great depression. it is noted by many economists and other. it is all the government interventions. it was coordinated. it was powerful. it was swift. they all recognize that. elizabeth warren had plenty of criticisms of how to get there. she said it was obvious. she said we would have been back in the stone age. >> the panel never channel been answered.

when you face the situation, they put it there. i think the kitchen sink, too. i think the figure out whether t.a.r.p. stop specific themes. this would have brubeck the grapes of wrath. panel agreed that t.a.r.p. and a bunch of other things really did stop the panic and keep us from a complete meltdown. the poinsettia number of negative things. the government is getting involved. and is not a sippers that -- perception of reality. panel fell that the federal government did that thing.

>> i wonder if it is not moral hazards to allow a nation to go into depression. >> absolutely. i was on a show today. the as the about the lessons learned. they learned prevention. everybody can sit here and we can talk about this are that. ellis it right with them. it is a moral hazard of putting people back on its feet. the moral hazard of creating this institute to fail. there is no when in that one. he had to make sure you never have to face that.

>> i often have average citizens stop in said "i do not get it, " when they make a mistake, they have to pay for their mistakes. explain systemic risk. it is a tough opposition. i am not thrilled t.a.r.p. as it was devised and executed. having listened to ben bernanke in 2008, and largely described a series of events that were unfolding, it would have a series of financial institutions collapse. surely you must have enough tools to get this through this time so we can think more be

proactively. we will have a global financial meltdown. basically, that women in the depression. market forces have been allowed to act on their own without any government intervention, we would be. his expertise is in depression- era economics. well work for roosevelt to get out of it.

a politician. it had some weight to it. sometimes you need a sabrina understanding of where we started. the timeframe in which we had to face it in order to understand where we have been and where we come from. i hope you have learned that we can prevent it for the future and understand how we the to do it in a more efficient way. i want to take this opportunity to put this in the right frame. thank you. >> if you would walk us through what happened at aig, what we

did to get into that, where we are today. you know they did to it earlier. there are all kinds of reports that everything is over with. i do not think that is true. >> in the recent past, there is at least some chance of us exiting aig. >> how much money have we put in? >> i think it was high as 115 billion at one time. >> that they paid that back? >> they paid a fair amount. >> what is a fair amount? that i think we are down to about $96 billion. the patent let $50 billion or $60 billion. >> they owe about 2/3. >> more or less.

>> that away substantial amount of money. >> if you include the assets -- >> tell us where we are today. >> the key is going to be the stock. >> that is a lot of money. >> that is a lot of money. there are questions about how deep the markets will be. we are doing it to look at it. >> it is something like 90 something billion dollars. you have to have a pretty good stride. >> there is about 20 of that that is financing for the troubled assets that the fed has put in. there is about 50 billion worth of equity. >> >> windy think that might

happen? >> i think there will be starting to sell in may. >> today is the following outstanding. under t.a.r.p. there is about $60 billion. the third is about $10 billion. it is done by assets. >> that is part of that $60 billion. >> today the stock prices are but the value of our investment. there are about $32 billion and the maiden lane vehicles bearing they have offered to

take it as of one of the vehicles. as of today, at current market prices expect to cover the entire thing. >> we do not have a specific time table being excuse me. it is my understanding that on several occasions to release their internal projections for the number of mortgages that is said to be successfully modified under the modification programs. have bbc all of the internal projections that you requested? yes.

we have. >> i assume that you provided that information. >> yes. how can we measure the success of the mortgage modification program now? >> as some of us have been saying, and think we have been seen benchmarks for some of the programs. i think that is what we would like to see. it does not mean they have done all the analysis we would like them to do. we live by them to try to come up with benchmarks for the programs. the public can be able to hold them accountable. >> you have to measure this.

you are in the process of doing that. >> when when you do that? >> i do not know that we have plans to do that. we look for to doing it in the future. >> what is the future mean? that we have ongoing work. >> all of you have named recommendations to the in ministration during the course of the oversight. how many recommendations have been made to be administration regarding tarp -- t.a.r.p. >> it has not yet been implemented. what is ongoing today and what is the biggest failure so far is related to it. i would go back to the modification.

stop accepting the status quo. fix the structure. imposed callbacks. why on earth had they not done so that -- have they not done that yet? they have not implemented this recommendation. >> >> i think we have implemented the recommendations with respect to the structure of the program. it is a compliance issue. all we can do is withhold the payments from when they actually enter in. the problem for the first year is that they were not getting a permanent modifications.

we felt this was a better results. i think he will see us impose more in the future. >> thank you perrin >> one more quick question. before hemp, when servicers led to their on devices, what kind of modifications were offered to struggling homeowners? >> that is out of our jurisdiction. this is a systemic problem for servicers. they had these incredible conflicts of interest.

big servicers do hold the lots of mortgages. they may be more interested in foreclosure than any kind of incentive. they hold a second lien. >> thank you. it is a very good question and important issue. prior to the launch of the program, there are few modifications that were occurring. this had been acute for two years. the few that were happening generally did not have the payments. one thing they accomplished was the standard as to how to go but modify mortgages. as well as a calculation of 4 makes sense to modify the mortgage. we do not pay for every modification.

we do it where it makes sense of the alternative to foreclosure. these services have done a lot of pride -- proprietary modifications fate this volume has increased dramatically as a result. >> can i say one other thing? voted on this. i was talking to someone who is emerging acquisition person. he did not understand why there was a problem there. they know they would lower it. the reason why the lenders

cannot have it, they know if they go into bankruptcy, they cannot handle the real assets. it is just about how the world works. it is about getting it. if it was a commercial loan, they would deal. this is what the value is. this is something to think about. the biggest difference between commercial and residential was reaching the modification. they know that they house prices will not be reduced. >> there are many lessons we can

take. one key one is that oversight improve outcomes. s chairman, i intend to follow the example and push for tougher oversight and all that they do. they have the foreclosure crisis. we can better protect consumers, investors, and taxpayers. thank you again. we have been here today. the meeting is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> earlier today there was a briefing on the military action

the u.s. is taking against muammar gaddafi. this is about 20 minutes. >> good afternoon. we will provide you with an operational update on our operations in libya. >> good afternoon, everyone. thank you for being here today. i want to take a few minutes to update you on our military operations in libya. i would be happy to take your

questions. we began our enforcement of united nations security council resolution 1973 yesterday with strikes on defense facilities and command infrastructure. i reported yesterday that coalition forces launched more than 10 tomahawk missiles in the mediterranean. that number rose to a total of 124. we judge these strikes to have been successful in degrading the regime's air defense capability and to preclude their ability to launch flights. the slide at my left shows where the strikes were executed. the strikes from yesterday are highlighted in yellow. the other strikes are highlighted in red. there has been no new air

activity by the regime. we have detected no radar emissions. there has been a significant decrease of all libyan air surveillance radars, which appeared to be limited to areas around tripoli. we are not ruling out further missile strikes when the need arises. in the past 24 hours, which conducted air strikes on military facilities and aircraft from an air field not far from -- these strikes were carried out last night lodging from the air force base and dropping from -- launching from the air force base. this is a dual use air field that is used for civilian commercial traffic. you can see the area -- i will point it out to you.

in grain in the center area. this is where the commercial part is. the military aircraft shelter is in the triangular shape. we targeted only those areas and facilities outside the box of civilian areas used to support aircraft. here is a depiction of one of the triangular portions. you can see the damage from the aircraft shelters, one of which we have blown up here that is flat in. ttened. in addition to the b-2 strikes, we also hit the command

headquarters of gaddafi. 15 u.s. air force and marine corps aircraft participated in these attacks, as well as aircraft from france and great britain. they were backed up and provide it with aircraft support. we just these two have been quite successful at halting the regime's ground movement. the highlight it box shows some still shots from the weapons system and video. benghazi is not completely safe from attack, but it is under less direct than it was yesterday. we believe the forces are under a good deal of stress and suffering from confusion. you can see here a basic laydown of how we see the battle face today. the regime forces are less free to maneuver. we now have the capability to

control the air space over libya. we are shifting to a more consistent their presence. as was reported this morning, the no-fly zone is effectively in place. let me conclude by repeating what i said yesterday. this is an international effort designed to enforce a united nations mandate. the coalition forces have been joined by forces from spain and qatar. we do not know when we will be ready to do -- know what the structure will look like. we are working hard to define it. we are committed to sustaining the conditions in which our allies and partners can maintain the no-fly zone. with that, i would be happy to take your questions. >> yesterday you were hesitant

to talk about whether colonel gaddafi was a target. is he himself now a target? >> we are focusing on the conditions we need and the target we need to enforce a no- fly zone. >> we are not going after gaddafi. >> you mentioned that there was an infantry element that was targeted. why is that part of the mission if the mission is to enforce the no-fly zone? why are you going after infantry elements? >> there were mechanized positions that were advancing on

benghazi. to protect the libyan people we took them under attack. >> gaddafi's ground forces are legitimate targets of this coalition. >> if they are moving and advancing -- advancing on the bourses in libya, we will take them under -- forces in libya, we will take them underattack. we knew that these advance elements were moving into benghazi. with armored equipment. we took them under attack. >> what can you do to stop the attacks? what do the ground forces have

to do to stop the attack? >> if they no longer advance on benghazi, that would be a good sign. >> do they have to just stop advancing the tax? -- attacks? >> i am not ready to answer that question. >> do you take seriously the cease-fire that has been called by gaddafi? >> i question anything that gaddafi calls for. he called for a cease-fire and been told his troops to into benghazi. >> will other countries be joining the coalition? >> other countries will be joining the coalition, but they have asked that they make the announcement. the bha has not come in yet.

the bomb hit assessment has not come in yet. >> where there hundred or dozens hit? >> i would say in the dozens. we have no indications of any civilian casualties. >> are we coordinating these attacks with rebel forces in the anyway? >> not at this time. >> the arab league has expressed hesitancy about the attacks. >> before i came in here, the arab league endorsed our enforcement of the no-fly zone. >> are there arab forces participating in strikes or the arab operations? >> we are in the process of transport bed -- transporting them and getting them into the theater.

one country we have announced is qatar. we are assisting in the movement of those forces. i will not discuss specific basis. came out of europe. >> were in the aircraft lost? >> of the aircraft crew have returned safely to their home bases. >> is still danger to these air crew. there are still people firing up in the air. they are not navy missiles. but there are people firing guns at them. >> at this point, the fixed surface to air missiles and the

early warning radars that would tell them where to point their missiles have been taken down. we do not see them. there are mobile surface to air missiles and a large number of hand-held man pads, sa-7 types. there are quite a few of those out there. we have airplanes that are designed to electronically attach or take under attack those particular targets, a package of those in order to do that. and then we use self-defense measures and speed and maneuver. >> in the back. hang on one second. >> i have not received that they have officially asked for us to announce that or that they are

under consideration. >> are there explosions being heard from weapons in tripoli? what should we assume those are? are those mobile systems? >> the surface to air guns -- we have not directly targeted those mobile sites. they could be any one of those. >> you are saying that the gaddafi forces have to stop advancing and that would stop the attack on gaddafi's forces. does the reverse holds true? if they stop and the rebel forces moved into their area, are you saying they are not allowed to engage the rebel forces under any circumstances and they have to lay their arms down? or do they have to stop forward movement? >> at this point, i am not able to specify the directives we

have put out there. we never fully prevented their planes from flying. -- there is a vast amount of air space. i would not rule out that nothing will fly. anything that does lie that we did that come we will engaged. >> you said you have not engaged fixed or mobile radar sites. why not? are they not in danger? >> have not attacked the mobile service to air radar site. the triple a sights are fixed or mobile. it is better to avoid them than to try to attack them

individually. >> there is concern that they have moved those to populated areas. you have any evidence of that? >> we have no evidence, but we cannot rule back possibility out. >> when did the barage of 12 4's end? >> it was probably around 2200 eastern standard time last night. >> have any more been shot today? >> that i am not aware of. >> which nations are actively patrolling the no-fly zone? >> the united states, the united kingdom, france at this particular point. as nations, you have seen

canada get to there and they have set up their infrastructure. we will work them into the next today's flying cycle. every day, you will see more nations start participating. >> how many planes are in the air and forcing it? >> i am not going to talk about particular tactical things. >> admiral mullen said the objective was to force them to launch over benghazi. can you elaborate on that? >> benghazi is part of the no- fly zone. we want to enforce the no-fly zone 24 hours a day. >> will you expand that? >> the no fly zone will encompass all the way from tripoli to benghazi and south.

i hazard to guess the number of miles. it's a past area. >> how much territory westward of benghazi right now do you feel is safe enough to start flying patrols? >> when you see us strike into tripoli all the way to south of benghazi, that is where we are enforcing the no-fly zone. >> how many people in u.s. will be about in the air strikes? >> we are on the leading age up a coalition effort that we will transition to the rest of the coalition. we will be providing a unique coalition. that is difficult to predict. as countries come in, they get

sufficient capacity and numbers to take over the front of the mansion -- one of the mission. i will not drive it to a time line at this time. >> when you say transition to the rest of the coalition, what does that mean? 1 country to several countries? >> our intent is to be a part of the coalition throughout and to transfer the command to a coalition command and then start using more of the capabilities that the coalition nations don't provide that we have, to shift the main effort. that would be takers, electronic support aircraft and things of that nature -- tankers, electronic support aircraft and things of that nature. >> canyons specified the

specialized aircraft? -- can you specify the specialized aircraft? >> many nations are putting in their aircraft. the specialty electronic airplanes, airborne command and control, tankers will be in there, a bit of logistic to enable this activity between the bases. >> in search and rescue efforts? >> we have search and rescue afloat at this particular time. >> what do you think enforcing the fly zone will cost?